Congressional Testimony

MONETARY POLICY AND THE STATE OF THE ECONOMY HYBRID HEARING BEFORETHE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS SECOND SESSION JUNE 23, 2022 Printed for the use of the Committee on Financial Services Serial No. 117–89 ( U.S. GOVERNMENT PUBLISHING OFFICE 48–333 PDF WASHINGTON : 2023 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\DOCS\HBA174.000 TERRI HOUSE COMMITTEE ON FINANCIAL SERVICES MAXINE WATERS, California, Chairwoman CAROLYN B. MALONEY, New York PATRICK MCHENRY, North Carolina, NYDIA M. VELA´ZQUEZ, New York Ranking Member BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma GREGORY W. MEEKS, New York BILL POSEY, Florida DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri AL GREEN, Texas BILL HUIZENGA, Michigan EMANUEL CLEAVER, Missouri ANN WAGNER, Missouri ED PERLMUTTER, Colorado ANDY BARR, Kentucky JIM A. HIMES, Connecticut ROGER WILLIAMS, Texas BILL FOSTER, Illinois FRENCH HILL, Arkansas JOYCE BEATTY, Ohio TOM EMMER, Minnesota JUAN VARGAS, California LEE M. ZELDIN, New York JOSH GOTTHEIMER, New Jersey BARRY LOUDERMILK, Georgia VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia AL LAWSON, Florida WARREN DAVIDSON, Ohio MICHAEL SAN NICOLAS, Guam TED BUDD, North Carolina CINDY AXNE, Iowa TREY HOLLINGSWORTH, Indiana SEAN CASTEN, Illinois ANTHONY GONZALEZ, Ohio AYANNA PRESSLEY, Massachusetts JOHN ROSE, Tennessee RITCHIE TORRES, New York BRYAN STEIL, Wisconsin STEPHEN F. LYNCH, Massachusetts LANCE GOODEN, Texas ALMA ADAMS, North Carolina WILLIAM TIMMONS, South Carolina RASHIDA TLAIB, Michigan VAN TAYLOR, Texas MADELEINE DEAN, Pennsylvania PETE SESSIONS, Texas ALEXANDRIA OCASIO-CORTEZ, New York RALPH NORMAN, South Carolina JESU´S ‘‘CHUY’’ GARCIA, Illinois SYLVIA GARCIA, Texas NIKEMA WILLIAMS, Georgia JAKE AUCHINCLOSS, Massachusetts CHARLA OUERTATANI, Staff Director (II) VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\HBA174.000 TERRI C O N T E N T S Page Hearing held on: June 23, 2022 .................................................................................................... 1 Appendix: June 23, 2022 .................................................................................................... 57 WITNESSES THURSDAY, JUNE 23, 2022 Powell, Hon. Jerome H., Chair, Board of Governors of the Federal Reserve System ................................................................................................................... 4 APPENDIX Prepared statements: Powell, Hon. Jerome H. .................................................................................... 58 ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Hill, Hon. French: Written statement of the American Enterprise Institute ............................. 63 Powell, Hon. Jerome H.: Monetary Policy Report of the Board of Governors of the Federal Reserve System, dated June 17, 2022 ....................................................................... 74 Written responses to questions from Representative Timmons ................... 151 (III) VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K:\DOCS\HBA174.000 TERRI VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\HBA174.000 TERRI MONETARY POLICY AND THE STATE OF THE ECONOMY Thursday, June 23, 2022 U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON FINANCIAL SERVICES Washington, D.C. The committee met, pursuant to notice, at 10:02 a.m., in room 2128, Rayburn House Office Building, Hon. Maxine Waters [chair- woman of the committee] presiding. Members present: Representatives Waters, Sherman, Meeks, Green, Perlmutter, Himes, Beatty, Vargas, Gottheimer, Gonzalez of Texas, Lawson, Axne, Casten, Pressley, Torres, Adams, Dean, Ocasio-Cortez, Adams, Garcia of Texas, Williams of Georgia, Auchincloss; McHenry, Lucas, Posey, Luetkemeyer, Huizenga, Wagner, Barr, Williams of Texas, Hill, Emmer, Loudermilk, Moon- ey, Davidson, Budd, Hollingsworth, Rose, Steil, Timmons, Sessions, and Norman. Chairwoman WATERS. Good morning. Before we get started with today’s hearing, I would like to ask unanimous request to adopt this resolution that was made available to all Members that names our newest committee member, Mr. Norman, to his subcommittee assignments. Without objection, it is so ordered. Today’s hearing is entitled, ‘‘Monetary Policy and the State of the Economy.’’ I now recognize myself for 4 minutes to give an opening state- ment. Welcome back, Chair Powell, and congratulations on your con- firmation as Chair of the Federal Reserve. Since you last came be- fore the committee, Americans continue to struggle to make ends meet as the prices of housing, gas, and groceries have skyrocketed. While it is important for the Fed to fight inflation, I would caution against any approach that ignores the Fed’s maximum employment mandate, and results in a recession, with millions of people losing their homes and jobs. I hope that you have noted that last week the House passed my bill, H.R. 2543, the Financial Services Racial Equity, Inclusion, and Economic Justice Act, which directs the Federal Reserve to con- sider the impact of all of its decisions, including setting interest rates on communities of color and underserved communities. Con- gress has a role in fighting inflation also. Housing is one of the largest contributors to inflation, and the housing shortage has allowed corporate landlords to hike the rent, forcing families to make difficult cuts elsewhere in their budgets. (1) VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 2 The Fed’s interest rate hikes will make borrowing more expensive and, thereby, could help reduce the out-of-control housing crisis. But without action by Congress, inflationary pressures will remain, because there is simply not enough affordable housing being built, and there won’t be until Congress makes the necessary invest- ments. That is why it is so important that we pass the housing title of the Build Back Better Act, which provides over $150 billion to- wards new housing construction, modernizing existing structures for the long term, and providing support so that people can be stably housed. We are also facing corporate consolidation and greed. Without healthy competition to drive down prices, megacorporations, driven by profit, are exploiting their economic power to squeeze Americans to the breaking point. Democrats in Congress put forth solutions to tackle inflation, but my colleagues across the aisle have consist- ently voted against every solution. Let me go over some examples. Democrats passed a bill with $28 million in funding to address the baby formula shortage, but Re- publicans voted, ‘‘no.’’ We passed legislation to crack down on price gouging from oil and gas companies, and Republicans voted, ‘‘no.’’ Last week, Democrats passed my Financial Services Racial Equity, Inclusion, and Economic Justice Act, and you guessed it: Repub- licans voted, ‘‘no.’’ Republicans can talk about problems, but they have zero solutions. Let’s also not forget that the Federal Reserve has more duties be- yond monetary policy. Bank mergers and banking deserts are af- fecting access to credit for low-income consumers and communities of color, and working families who turn to cryptocurrency to gen- erate wealth are now seeing their hard-earned savings disappear. Now more than ever, the Federal Reserve must work with other regulators to properly oversee the cryptocurrency market and pro- vide guidance on a more stable alternative to volatile cryptocurrencies. Lastly, the confirmations of Lisa Cook, Susan Collins, and Philip Jefferson are historic, but more must be done to ensure diversity at the Federal Reserve. So, Chair Powell, I look forward to hearing your testimony this morning. I now recognize the ranking member of the committee, the gen- tleman from North Carolina, Mr. McHenry, for 4 minutes to give an opening statement. Mr. MCHENRY. Thank you, Madam Chairwoman, and thank you, Chairman Powell, for being here with us again. A year ago, President Biden tried to buy support by signing into law a $2-trillion stimulus bill. What he did was sell ordinary Amer- icans, who are now repaying all of that, ‘‘free money.’’ Inflation is the worst it has been in 40 years. American families are rethinking their long-awaited summer vacations because they can’t afford a $5-a-gallon price at the pumps. Costs are spiraling out of control for everything from housing and food to airfare, cars, medical care, and clothing. Democrats are still on the hunt for the scapegoat. They blamed oil companies, the war in Ukraine, and supply chain issues in Asia, but let’s be clear: It is the Democrats’ trillions in VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 3 wasteful spending that resulted in higher grocery bills and soaring gas prices. President Biden continues to deny that the so-called American Rescue Plan contributed to inflation, recently calling that idea, ‘‘bi- zarre.’’ Well, economists across the ideological spectrum, from former Clinton Treasury Secretary Larry Summers, to Jason Furman, to Michael Strain, don’t think it is bizarre. Even the left- leaning San Francisco Fed found that the American Rescue Plan contributed to price increases. And now, millions of Americans need to be rescued from the Democrat’s American Rescue Plan. I am confident that Chair Powell is taking this emergency seri- ously, and as I have said many times before, I think he is the right man for the job, and he is. But how the Fed manages the next few months will be as critical as any other period during the last 4 dec- ades. No one at the Central Bank was prepared for prices rising at a clip of 8 percent, with even core inflation rising and running at 6 percent now. Republicans have long warned about the size of the Fed’s balance sheet, but it grew by nearly a trillion dollars over the last 12 months alone. And now it seems the previous pre- dictions by the Federal Open Market Committee (FOMC) about economic projections are wrong, and they are altering their course. Simply put, the Fed has its work cut out for it. Lastly, I want to address the left’s ongoing efforts to expand the Fed’s dual mandate. Republicans have been on the record opposing this, and I hope that the skyrocketing inflation unleashed under the Biden Administration puts an end to these discussions. The Fed should be focused on price stability. That should be their sin- gle-minded focus at this moment in time. It is out of touch for Democrats to keep pushing mission creep at the Fed when Amer- ican families are struggling to feed themselves and to get to work. The Fed is a serious place with serious business to attend to. It needs to focus on the middle-class, not the chirping political class. This was true before inflation broke out, and it is all the more obvi- ous today. I hope that Chair Powell will deliver that message to his col- leagues throughout the institution, and, again, I want to thank Chair Powell for his testimony today, for his willingness to engage with policymakers on the Hill, and for his openness in what has been a more closed-off institution. We have a massive cleanup, and we know that you are taking your job seriously. And I am glad you are taking your job seriously. And with that, Madam Chairwoman, I yield back. Chairwoman WATERS. Thank you, Ranking Member McHenry. I now recognize the gentleman from Connecticut, Mr. Himes, who is also the Chair of our Subcommittee on National Security, Inter- national Development and Monetary Policy, for 1 minute to give an opening statement. Mr. HIMES. Thank you, Madam Chairwoman, and welcome, Chairman Powell. Congratulations on your confirmation. I don’t remember a moment as consequential as this one for the Federal Reserve or as potentially testing of its leadership. I think I have to go back to the end of 2008 and the first quarter of 2009 to think of a moment that was quite as important, as Americans watched the economy collapse around their ears and their jobs and VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 4 assets being lost. There is a very real possibility that Americans will be caught in a vise, an economic vise not of their own making, between inflation, which makes their everyday lives unaffordable, and the possibility much contemplated by economists of a reces- sion. Simply put, as one of the last Members of Congress to get out of the Chamber when it was under attack on January 6, 2021, I don’t believe that our democracy can sustain either runaway infla- tion or another recession, and despite the rhetoric you will hear all day today here, there is not a lot that we can or will do. Much of this rests on your shoulders. Chairman Powell, I just ask that as you make your decisions, you think not just of the numbers and the economics, but of the importance of sustaining this nation’s democracy. Chairwoman WATERS. Thank you, Mr. Himes. I now recognize the ranking member of the Subcommittee on National Security, International Development and Monetary Policy, the gentleman from Kentucky, Mr. Barr, for 1 minute to give an opening state- ment. Mr. BARR. As we face the worst inflation the country has seen in 4 decades, I am encouraged to have Mr. Powell leading our Cen- tral Bank, and I am hopeful that the Fed will rise to the occasion. At the same time, it is important to remember the following. Just last year, Democrats were ignoring inflation warnings to pass a $2- trillion stimulus bill. They were pushing the Fed to solve climate change and social ills, and they flirted with unconventional mone- tary tools like yield curve control. Today, as gas prices top $5 a gal- lon, these left-wing ideas seem like a fever dream from an alter- nate universe, but many Democrats fell for them at the time, and they will likely pursue them again if inflation subsides. The lesson for the Fed is clear: It needs to focus on doing a lim- ited number of jobs well and not get distracted by those who want it to be all things to all people. Specifically, the Fed should be laser-focused on its price stability mandate. And even as you ac- knowledge the risk of recession, and as everyone desires a soft landing, I encourage the Fed to have the fortitude to prioritize de- feating this inflation scourge. Chair Powell, I hope you are ham- mering this message home with the Fed, as ordinary Americans see their paychecks eaten away under Democrat mismanagement of our economy. Chairwoman WATERS. And now, I want to welcome today’s dis- tinguished witness, the Honorable Jerome Powell, Chair of the Board of Governors of the Federal Reserve System. Chair Powell, you are now recognized for 5 minutes to present your oral testimony. And without objection, your written statement will be made a part of the record. STATEMENT OF THE HONORABLE JEROME H. POWELL, CHAIR, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. POWELL. Chairwoman Waters, Ranking Member McHenry, and members of the committee, I appreciate the opportunity to present the Federal Reserve’s Semiannual Monetary Policy Report. I will begin with one overarching message. At the Fed, we under- stand the hardship that high inflation is causing. We are strongly VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 5 committed to bringing inflation back down, and we are moving ex- peditiously to do so. We have both the tools we need and the re- solve it will take to restore price stability on behalf of American families and businesses. It is essential that we bring inflation down if we are to have a sustained period of strong labor market condi- tions that benefit all. I will review the current economic situation before turning to monetary policy. Inflation remains well above our longer-run goal of 2 percent over the 12 months ending in April. Total Personal Consumption Expenditures (PCE) prices rose 6.3 percent. Excluding the volatile food and energy categories, core PCE prices rose 4.9 percent. The available data for May suggests that the core measure likely held at that pace or eased slightly last month. Aggregate demand is strong, supply constraints have been larger and longer-lasting than anticipated, and price pressures have spread to a broad range of goods and services. The surge in prices of crude oil and other com- modities that resulted from Russia’s invasion of Ukraine is boost- ing prices for gasoline and fuel and is creating additional upward pressure on inflation. And COVID-19-related lockdowns in China are likely to exacerbate ongoing supply chain disruptions. Over the past year, inflation has also increased rapidly in many foreign economies, as discussed in a box in the June Monetary Policy Re- port. Overall economic activity edged down in the first quarter, as un- usually sharp swings in inventories and net exports more than off- set continued strong underlying demand. Recent indicators suggest that real GDP growth has picked up this quarter with consumption spending remaining strong. In contrast, growth in business fixed investment appears to be slowing, and activity in the housing sec- tor looks to be softening, in part reflecting higher mortgage rates. The tightening in financial conditions that we have seen in recent months should continue to temper growth and help bring demand into better balance with supply. The labor market has remained extremely tight, with the unem- ployment rate near a 50-year low, job vacancies at historic highs, and wage growth elevated. Over the past 3 months, employment rose by an average of 408,000 jobs per month, down from the aver- age pace seen earlier in the year, but still robust. Improvements in labor market conditions have been widespread, including for work- ers at the lower end of the wage distribution, as well as for African Americans and Hispanics. A box in the June Monetary Policy Re- port discusses developments in employment and earnings across all major demographic groups. Labor demand is very strong, while labor supply remains subdued, with the labor force participation rate little changed since January. The Fed’s monetary policy actions are guided by our mandate to promote maximum employment and price stability for the Amer- ican people. My colleagues and I are acutely aware that high infla- tion imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transpor- tation. We are highly attentive to the risks that high inflation poses to both sides of our mandate, and are strongly committed to returning inflation to our 2-percent objective. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 6 Against the backdrop of the rapidly-evolving economic environ- ment, our policy has been adapting, and it will continue to do so. With inflation well above our longer-run goal of 2 percent, and an extremely tight labor market, we raised the target range for the Federal funds rate at each of our past three meetings, resulting in a 11⁄ 2 percentage point increase in the target range so far this year. The committee reiterated that it anticipates that ongoing increases in the target range will be appropriate. In May, we announced plans for reducing the size of our balance sheet and shortly there- after began the process of significantly reducing our securities hold- ings. Financial conditions have been tightening since last fall and have now tightened significantly, reflecting both policy actions that we have already taken and anticipated actions. Over the coming months, we will be looking for compelling evi- dence that inflation is moving down, consistent with inflation re- turning to 2 percent. We anticipate that ongoing rate increases will be appropriate. The pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy. We will make our decisions meeting by meeting, and we will continue to communicate our thinking as clearly as possible. Our over- arching focus is using our tools to bring inflation back down to our 2-percent goal and to keep longer-term inflation expectations well- anchored. Making appropriate monetary policy in this uncertain environ- ment requires a recognition that the economy often evolves in un- expected ways. Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We, there- fore, will need to be nimble in responding to incoming data and the evolving outlook, and we will strive to avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time. We are highly attentive to inflation risks and are determined to take the measures necessary to restore price stability. The Amer- ican economy is very strong and well-positioned to handle tighter monetary policy. To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you, and I look forward to your questions. [The prepared statement of Chairman Powell can be found on page 58 of the appendix.] Chairwoman WATERS. Thank you very much. Chair Powell, at your Senate confirmation hearing, you were asked about the possi- bility that inflation is being driven by corporations and con- centrated sectors of the economy. You said, ‘‘That could be right. It could also just be, though, that demand is incredibly strong and that they are raising prices because they can.’’ We are all seeing and feeling the effects of inflation on consumer pocketbooks, but corporate profit margins are not hurting. In 2021, the profit margins of the S&P 500 Index surpassed 12 percent, the highest profit margin on record, and it is expected to be even high- er in 2022. Corporate greed and consolidation are driving higher and higher prices for consumers above and beyond any inflationary pressures. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 7 Just last quarter, Tyson Foods, which sells 1 out of every 5 pounds of meat sold in the United States, claimed that their higher prices are due to rising labor and freight costs, yet they still man- aged to net an additional half-a-billion dollars in quarterly profits. When it comes to rents, a corporate landlord recently remarked, ‘‘We have an unprecedented opportunity to really press rent on re- newals because the country is highly-occupied. And so, where are people going to go? They can’t go anywhere. We have a tremendous opportunity to press both on renewing leases for citizen residents, and to reset market rates, which we have reset numerous times, even this year.’’ This kind of blatant profiteering on the backs of hardworking families is simply outrageous. Could you elaborate on the role that corporations play in setting prices and how that is affecting infla- tionary pressures today? Would you also elaborate on what you meant when you said that perhaps corporations are raising prices, ‘‘because they can?’’ Mr. POWELL. Sure. Matters of concentration in the economy rep- resent a series of interesting questions that are largely not settled. For one thing, it is clear that our economy has become more con- centrated, largely due to lower levels of formation of smaller busi- nesses; that has happened. It is not at all clear that there is a con- nection between a more-concentrated economy and, for example, in- flation. And, of course, matters of corporate concentration are out- side the jurisdiction of the Fed. Those are for the competition au- thorities and really not for us to discuss. In terms of why prices are going up, I think a lot of the places where prices have gone up quite a bit have been situations where supply is constrained and demand is very strong. Take cars, for ex- ample. Demand for cars went up a great deal. During the pan- demic, people wanted to ride in cars rather than public transpor- tation, and they wanted to move to the suburbs and things like that. Rates were low. The economy was stronger than people ex- pected. But the companies couldn’t really make more cars, because they couldn’t raise their output, because of the lack of semiconduc- tors. So when demand hits fixed supply, what happens is that prices go up, and margins went up. And I think as the economy re- turns to normal, we would expect those profit margins to return to more normal levels. Chairwoman WATERS. Chairman Powell, the example that I gave of Tyson Foods and the fact that they said that their prices were rising due to labor and freight costs, yet they managed to net an additional half-a-billion dollars in quarterly profits, how do you ex- plain that? Mr. POWELL. I am not familiar with their profit and loss state- ment, but I will say, and, again, there may be particular industries where there are competition issues. I don’t know that. It is really not our focus or our authority. Chairwoman WATERS. Do you have the opportunity to look at ris- ing costs and identify corporations where they are gaining substan- tial profits, yet they keep raising their prices? Do you have a way of examining that? Mr. POWELL. I think we can see that, but I think our job is to keep maximum employment and price stability. We are not in the VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 8 business of regulating individual companies or determining wheth- er their actions, for example, are anticompetitive or that sort of thing. That is more for elected people and also for the competition authorities. We do look at that, and, again, I think a great deal of the price increases that you saw were a matter of supply being un- able to meet demand, and the result was prices moving up. In many cases, that was the story. Chairwoman WATERS. Thank you very much. The gentleman from North Carolina, Mr. McHenry, who is the ranking member of the committee, is now recognized for 5 minutes. Mr. MCHENRY. Thank you, Madam Chairwoman. On this debate about corporate profits, I would commend to the committee Sec- retary Yellen’s statement, where she rejects the idea that corporate greed is to blame for inflation, and I concur. We have a complex set of issues. The fiscal house was certainly different than mone- tary policy. And the extraordinary nature of the partisan American Rescue Plan, $2 trillion injected into a recovering economy and Democrat policies to keep people out of the workforce for longer than the rest of the western world also contributed to inflation. That is a political debate here on Capitol Hill, Chairman Powell, and that is on the political side. What I want to ask you about are the policy tools that you are using. Now, certainly, you as Chair of the Fed and the Federal Open Market Committee, took extraordinary measures in the midst of the pandemic to ensure that we didn’t have further contagion, including extraordinary lending facilities, purchasing securities, and keeping the Federal Funds Rate at zero. These were the right tools at the right time. On the fiscal side, you have to partner with bipartisan bills to keep our economy afloat during government shutdowns, but like all good firefighting measures, we should put them away when times change. I want to ask you, as you put these measures away, how do you expect the economy to respond? Let’s start here. What is your level of commitment to fight inflation? Mr. POWELL. It is unconditional, our commitment is, and the rea- son is, in a particular situation, we have a labor market that is sort of unsustainably hot, and we are very far from our inflation target. We really need to restore price stability, and get inflation back down to 2 percent, because without that, we are not going to be able to have a sustained period of maximum employment where the benefits are spread very widely and where people’s wages aren’t being eaten up by inflation. Really, it is something that we need to do, that we must do. In order to have that kind of a labor market, we will need to do it. Mr. MCHENRY. As you pull back these emergency measures from COVID, and you normalize rates to what they look like sort of in the long run, how do you expect the economy to respond? Mr. POWELL. When we raise interest rates and also, to a lesser extent, when the balance sheet shrinks, what happens is rates go up across the economy, and financial conditions generally tighten. And you can think of it as in interest-sensitive spending is an im- portant place that will be affected, and that is things like auto- mobiles and other durable goods. If rates are higher, then demand for cars will moderate, will decline a bit. The second channel would be asset prices generally. We don’t target any particular asset VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 9 prices, but higher interest rates tend to bring them down broadly. That tends to mean a little bit less spending because people’s wealth has perhaps declined a little bit. And the third channel can be the exchange rate where that also has disinflation effects. So overall, we have these effects on the economy. Our intent, of course, is to bring inflation down to 2 percent while preserving a strong labor market. As I have mentioned, that has become significantly more challenging with the events of the past few months, particularly the war, which is driving gas prices up, and raising energy prices and also food prices, and disrupting supply chains further. Mr. MCHENRY. At the same time you have a massive balance sheet. First, begin with mortgage-backed securities. As we have a roll off of the Fed’s balance sheet of mortgage-backed securities, what are your expectations for how that affects housing? Mr. POWELL. I think what will affect housing is the rate—the housing industry and market are slowing down from a very, very hot pace, and that is partially because of higher mortgage rates. The effects of shrinking the balance sheet will be marginal com- pared to the effects that we are seeing and expect to continue to see from rates rising and rising mortgage rates. Mr. MCHENRY. But what are your expectations? Can we expect further announcements on the assets you hold and the securities you hold? Are there going to be balance sheet announcements in the coming weeks? Mr. POWELL. No. I would say this. We have a plan. We have ar- ticulated it. The markets are forward-looking. They see it, and the markets are in a good place, I think, of understanding what we are going to do. And that is, we are going to be allowing these securi- ties to mature and run off our balance sheet at a pace that we have set, and it will be $90 million or $95 billion, I guess, by September. Now, it is about half of that. So, that is what we have done. The idea is that will just be on an ongoing basis in the background, and we think the markets can handle that. Treasury issuance is way down, so we think there will be demand for these securities, and Treasury will then reissue them in whatever form they think is ap- propriate when it relates to Treasuries. Mr. MCHENRY. Thank you. Chairwoman WATERS. The gentleman from New York, Mr. Meeks, who is also the Chair of the House Committee on Foreign Affairs, is now recognized for 5 minutes. Mr. MEEKS. Thank you, Madam Chairwoman. Chair Powell, it is good to see you. And I know you will probably hear a lot of political stuff going back and forth, but the American public is trying to un- derstand the language of which we are talking today so that we can really understand what inflation is. I was just recently over in Europe. There is inflation in Europe, just like there is inflation here, although as I talked to Christine Lagarde and others, they say the cause of the inflation may be dif- ferent. So, the causes are different. They said that it may be de- mand here, but it’s not a case of demand there to resolve inflation in Europe. For example, I was in Moldova, with a 30-percent infla- tion rate, and gas at $15 a gallon; and Turkey, with an 18-percent inflation rate, and gas at $13 a gallon. And I could name places in VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 10 Europe and from Europe to the United States. Is it that we had, whether it was the supply chains, the China shutdown, complete shutdown, the zero COVID policy, Russia’s war in Ukraine, COVID period, isn’t just a massive storm of everything what contributes to inflation and causes it all over the world? Mr. POWELL. Pretty much. Yes, I think that is a pretty good— Mr. MEEKS. It is a little bit of everything, right? So if I am talk- ing to my constituents, trying to explain to them what inflation is and what causes it, I would not single out any one thing. I would probably have to talk about the conglomerate of things, because if you take away two or three of those, we might not be in the situa- tion here, all of it unprecedented, all of it really out of the control of anyone, out of the control of the Democrats, out of the control of the Republicans, out of the control of the President, out of the control of other governments, isn’t that correct? Mr. POWELL. Some of it is out of our control, for example, the price of oil and most of the price of food. And to your point, for Eu- rope, it is much more about energy and food prices, very difficult problems. And also, of course, the European Central Bank (ECB) has different countries, and so they have to worry about the spreads between different countries, and that is a different chal- lenge that we don’t have here. The difference here for us is we ac- tually have a very strong economy and well-recovered economy, so more of our inflation is from demand, and we do have tools to deal with demand. That is the place where we actually can work, and that is where we are using our tools. Mr. MEEKS. And some of that was because during the crisis that we had, we had to do certain things, the stimulus and other things, to make sure that we kept our economy stable. Without doing those things, we would have been in trouble. So the things that we did, going through COVID with the stimulus, trying to make sure peo- ple kept their jobs, kept money coming in at the time, was what we had to do. Otherwise, we would have been in worse shape or not have a strong economy as we have now compared to other countries, isn’t that correct? Mr. POWELL. Yes, I would say it this way, that our inflation is a consequence of very strong demand, in part driven by supply by what Congress did to support activity, in part driven by what we did, but also— Mr. MEEKS. But that helped stabilize our economy at that time, right? Mr. POWELL. It did. Mr. MEEKS. And if we did not do those things, our economy may not be as strong as it is right now. Mr. POWELL. I think that is right. Mr. MEEKS. That is correct. Mr. POWELL. Our economy is strong. Mr. MEEKS. And let me jump to something else really quickly, because the one other thing—I know you testified before the Senate yesterday, and what concerns a number of my constituents that I talk to was the question about, can we resolve inflation without in- creasing unemployment, because our folks are concerned about los- ing their jobs. It would be worse if they were unemployed. My question to you is, can you speak to what the Fed has seen during VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 11 the last few years with respect to the relationship between unem- ployment and inflation, and is it possible that we can continue to have a strong labor market while also curbing inflation? Mr. POWELL. It is certainly possible that we can, and there is a relationship between unemployment and inflation. The challenge now is that inflation is at a 4-decade high, and we can deal with some of it. Some of it is really going to be dealt with on global mar- kets—the price of oil and that kind of thing—and we can’t affect those. But the challenge is we are tightening monetary policy, and that is designed to drive growth down to a level that is more sus- tainable and lower, give the supply side a chance to catch up, and give inflation a chance to come down and bring inflation down. That is what we are trying to do. We don’t have precision tools. We raise and lower interest rates that affects the whole economy through many channels. And there is a risk that unemployment would move up from what is an his- torically-low level. A labor market with 4.1 percent or 4.3 percent unemployment is still a very strong labor market. Today’s rate is 3.6 percent, and there are two vacancies for every unemployed per- son, so that is the labor market that is kind of overheated. Chairwoman WATERS. The gentlewoman from Missouri, Mrs. Wagner, is now recognized for 5 minutes. Mrs. WAGNER. Thank you, Madam Chairwoman. Chair Powell, thank you for joining us again today. I just want to start by saying how sick and tired I am of the President’s inflation blame game. One day its Putin’s fault, another it is the oil companies, or the meat packers, or perhaps it is corporate greed. Now, we are blam- ing other countries like Estonia, and Turkey. I give you my avid assurance that no one in Missouri’s 2nd Congressional District gives a rip about the price of gas and groceries in Europe. They care about what they are at the corner of Manchester Road and Weidman. No one in this Administration is willing to accept re- sponsibility for the dismal economic situation America is in today. Inflation, sir, more than tripled in 2021, from 1.4 to 7 percent. And from June to the end of September 2021, inflation hovered, I think, around 5.4 percent, and then began a steady increase until reach- ing an historic 8.6 percent that is now crippling American’s spend- ing power today. Chair Powell, when inflation remained steady at 5.4 percent, during that period in 2021, what factors played into the Fed’s deci- sion to keep rates at nearly zero during each FOMC meeting in June, in July, and in September of 2021, sir? Mr. POWELL. During the summer of 2021, just giving us hind- sight, inflation was coming down month by month. If you look at monthly readings for the Consumer Price Index (CPI), or Personal Consumption Expenditures (PCE), they were coming down month on month on month through September. And so that, I think, told us that our thesis that this was going to be a passing inflation shock was at least plausible. I think that the data turned pretty hard in October and November, and we very much changed our po- sition and since then have tightened financial conditions quite sig- nificantly. So, it was a matter of a few months when we were really looking at this and thinking it is going to be passing. Most macro- VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 12 economists thought that it would be a passing thing. It turned out to not have been so far, and— Mrs. WAGNER. But we saw it move from 1.4 percent to 5.4 per- cent. We did have a steady period of time where, I wouldn’t say that it was declining, but I am just surprised that we weren’t mov- ing more quickly at the Fed. I want to be honest, sir, that the Fed, I think, underestimated actual inflation. What do you think you missed? Mr. POWELL. We did underestimate it, and with the benefit of hindsight, clearly, we did. It comes down to this judgment that we had to make. It really has nothing to do with our framework or anything like that, and every central bank had to make the same judgment, which was looking at the supply chain problems and the shock to labor force participation, with millions of people out of the labor force. We had to decide whether that was going to be a last- ing thing or whether it would kind of turn around quickly. We had very high levels of labor force participation. Suddenly, they are much lower. The thought was that people will come back as soon as COVID is over. We have these new vaccines. Every American is going to get vaccinated. We will be done with COVID by the end of the year. Basically, these supply-side issues, broadly speaking, just didn’t get better. There were recurring waves, and that was the judgment we had to make. We knew it could be wrong. And I think when it was starting to look pretty wrong, we moved, we pivoted pretty hard— Mrs. WAGNER. Now, President Biden continues— Mr. POWELL —like 7 months ago. Mrs. WAGNER. President Biden continues to say that a recession is not inevitable, as he, his government agencies, and Democrats, and Congress continue to spend billions and trillions of taxpayer dollars, burdening businesses with costly rules and regulations, and on top of it, the President refuses to unleash American energy independence. The President’s policies continue to take inflation- taming options, I think, off the table and hamstring the Fed’s abil- ity to focus on price stability. President Biden not only limits the energy production here in America, and spends trillions of our tax- payers’ money, but he also threatens tax increases and promises to cancel billions in debt. How can you still say, sir, that the Fed has a pathway to a soft landing for the economy? Mr. POWELL. Our intention is to achieve inflation getting back to 2 percent and— Mrs. WAGNER. With all I have laid out? Mr. POWELL. —with a strong labor market. I’m sorry? Mrs. WAGNER. With all I have laid out, and the increases you are going to have to take? Mr. POWELL. As I mentioned, I think that path has gotten more and more challenging, thanks to the effects on oil prices and food prices really and also the supply chains from the war in Ukraine. We never said it was going to be— Mrs. WAGNER. Not just the war in Ukraine, sir. Mr. POWELL. It is the rise in energy prices, which began in the latest rise from February. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 13 Mrs. WAGNER. The latest rise—this has been going on for a year- and-a-half. I appreciate the Chair’s indulgence. I will yield back the balance of my time. Thank you, Chairman Powell. Chairwoman WATERS. The gentleman from Texas, Mr. Green, who is also the Chair of our Subcommittee on Oversight and Inves- tigations, is now recognized for 5 minutes. Mr. GREEN. Thank you, Madam Chairwoman. And thank you for being here, Chair Powell. I greatly appreciate the opportunity to share a few thoughts with you. In February of 2021, you indicated that millions of people were out of the labor force, which is what you have said today. Millions. And with millions of people out of the labor force, the Biden Administration and persons on my side of the aisle sought to do something about that, to help those who are unemployed. The inflation that my colleagues speak of has to do with unemployment, the help that we gave people who were un- employed at the time. Persons who are unemployed, Mr. Chairman, need help. They can’t feed their families. Small businesses were screaming for help. We helped small businesses get through a turbulent time. This was a pandemic. The vaccines had to be distributed and developed. That is a part of that inflation that they are speaking of. People needed rental assistance. People were literally going to be evicted by the millions, but for the assistance from the Biden Administra- tion and Congress. We wanted people to go to work. We provided some childcare. If you want people to go to work, and schools are closed, you have to help people through these turbulent times. They never talk about what the inflationary costs that they speak of really did, how it benefited American people who are suffering. They overlooked that. They weren’t going to help, and now, since they didn’t help, they are going to say everything that they can to demean the help that was given. They didn’t vote for it. They didn’t extend the hand of friendship to people in times of need. So when they don’t do that, they have to find a way to denounce the help that was given. It is really shameful, it is painful, and it is sinful to hear people use the term, ‘‘inflation,’’ to indicate that people who were unemployed shouldn’t have received help. The small businesses that were begging for help shouldn’t have been helped. Vaccines shouldn’t have been dis- tributed. People shouldn’t have gotten rental assistance. They shouldn’t get childcare. Now, I would respect them if they would say that these are things that they opposed, but they are not going to do that. They use one word—inflation—and, unfortunately, our messaging to all of the American people has been somewhat lacking. But I want the people that I serve, who pay attention to the supermarket more so than the stock market, to know that when they had needed this help, we were there for them. And, Mr. Powell, you indicated that there were millions of people out of work in February of last year, just prior to this help accorded people. I welcome your commentary. Mr. POWELL. Oh, you welcome my commentary. Sorry, I didn’t catch the last part. Our job is maximum employment and price sta- bility. We did what we did during the pandemic acute phase and response, and you did what you did, and now we are where we are. So, we have a job to do, and it is very important that we do it, not VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 14 least because of the people that you talk about. The people you talk about are really suffering from inflation now at the grocery store. And the only way we can get back to a place where inflation is low again, get inflation back down to 2 percent and help those people, is by trying to get demand and supply back in balance. Mr. GREEN. Let me intercede and say this. You said something that I find favor with. You said that we did what we had to do. We were the adults in the room who did what had to be done. Oth- ers who declined to do so can now be critical. I yield back. Chairwoman WATERS. Thank you very much. The gentleman from Minnesota, Mr. Emmer, is now recognized for 5 minutes. Mr. EMMER. Thank you, Chairwoman Waters. Thank you for holding this hearing, and thank you, Chair Powell, for your testi- mony and your time here today. Financial freedom is American freedom, and, frankly, Americans do not have the financial and economic freedom they need to invest in themselves, their businesses, and their families. Unfortunately, Americans are too busy making ends meet to focus on anything else. Inflation is running rampant across the United States with consumer prices rising 8.6 percent in the past year, the largest price increase since 1981. From fuel, to meat, to housing, my con- stituents and all Americans are suffering at the hands of this hid- den tax, except it is not so hidden anymore. It is punching Ameri- cans in the face as my friend, Mr. Steil, put it yesterday. How did we get here? It is pretty simple. We gave up American energy independence, we locked down our citizens and businesses for nearly 2 years, pumped the economy with well over $5 trillion in what is called stimulus funds. And now, as we recover from the pandemic, we simply do not have the energy resources necessary to meet the increased consumer demand. There is a history of Dem- ocrat policies we can point to that put us in this position from re- fusing to adopt an all-of-the-above energy strategy to recklessly passing $2 trillion in partisan spending through the American Res- cue Plan, despite the fact that nearly $1 trillion of bipartisan relief was unspent. But the bottom line is we need solutions now because inflation is beating up the American people. We have to wake up and realize that we cannot continue these spend-your-way-to-pros- perity policies. Everyday inflation threatens the financial security of American families, of our constituents. We need solutions. Let me just return to my point about the spending. In December 2020, we had authorized nearly $4 trillion in bipartisan COVID re- lief. Yet, just 3 months later, Democrats pushed through another $1.9 trillion with hardly any oversight mechanism included, even though a quarter—a quarter—of all COVID relief remained unspent. When President Biden was recently asked if the $1.9 tril- lion spending bill caused inflation, he said he didn’t think the bill had even a minor impact, and called the idea, ‘‘bizarre.’’ Chair Powell, do you agree with the President’s conclusion that the $1.9 trillion that was included in the American so-called Rescue Plan had not even a minor impact on the inflation we are seeing today? Mr. POWELL. I’m sorry. I wouldn’t comment on what any elected official said, and it is really not up to us to score fiscal interven- tions. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 15 Mr. EMMER. Again, sir, if you would—respectfully. I am not ask- ing you to comment on what the President said. I am asking you, personally, do you believe that the $1.9-trillion American Rescue Plan did not even have a minor impact on the inflation we are see- ing today? Mr. POWELL. We didn’t comment on the Tax Cuts and Jobs Act. We didn’t comment on the CARES Act. And we won’t comment on that act from that— Mr. EMMER. It is interesting, sir, that you won’t comment on this, but you were more than willing a year ago to talk about infla- tion as some transitory something that everyone has acknowledged now is going to be here for a while. Even though it seems like the President’s Build Back Better package, this massive spending pack- age, is dead on arrival, certain elements might not be dead. Chair Powell, do you have any concerns that if Congress injects a new round of stimulus into the current economy, it could and, in fact, will add to the inflation we are seeing today? Mr. POWELL. Again, it is really not our role to give you advice on what to do. We report to Congress, not the other way around. We are sticking to our mandate and our mission, and we have a lot of work to do on that front and not really giving you advice on what you should be doing. We take fiscal policy as something that comes to us, and we deal with it as part of everything else. Mr. EMMER. I am very disappointed, sir. You are supposed to be in charge of the monetary policy of this country. You are now em- barking on raising interest rates because that is the only tool you think you have left. This is not just a dog chasing its tail anymore, sir. This is a dog that has started to devour its tail and its back end because of the debt that we are carrying. I want to thank you. You acknowledged we are in a bad spot. We are knowingly walking toward an even worse inflation, a recession and, God forbid, food shortages, yet we are relying on old monetary policy tools to keep us from falling off a cliff. Sure, we can raise interest rates over and over, but the only way to curb in a disaster this bad is to raise the interest rates to a catastrophic level, or, as Larry Summers suggested, we allow unemployment to go to histor- ical highs. It is not feasible. We need to put ourselves on a strict spending diet, and we have to have strict oversight on the funds that Con- gress has already allocated and make sure not even one single dol- lar is going to waste. And we need to put control back in the hands of small businesses on Main Street. Thank you. Chairwoman WATERS. The gentleman from Connecticut, Mr. Himes, who is also the Chair of our Subcommittee on National Se- curity, International Development and Monetary Policy, is now rec- ognized for 5 minutes. Mr. HIMES. Thank you, Madam Chairwoman, and Chairman Powell, if you will indulge me for a minute, it is important for the American people to understand what is being said here today be- cause it is being said in other rooms in this building. What the American people are seeing today is something that my Republican Party friends have given over to recently all too often, and that is rank dishonesty in the service of acquiring and retaining power. A party without any resilient or discernible principle has stumbled VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 16 upon inflation. There is inflation all over the world: Germany, Japan, Africa, South America, the United Kingdom. There is infla- tion all over the world, but the Republican Party has decided that inflation is Joe Biden’s fault or the American Recovery Plan’s fault. I have read the Monetary Policy Report from start to finish. It mentions the Russian invasion of Ukraine, supply chain bottle- necks, high fuel costs, and high wage growth. It does not mention Joe Biden or the American Recovery Plan. By the way, the Amer- ican Recovery Plan is a particularly rank piece of dishonesty. Set aside the fact that it cut childhood poverty in half, as Mr. Green pointed out, if that isn’t something to celebrate, and to perhaps have the slightest bit of humility as you attack it, I don’t know what I can do for you. The American Recovery Plan, as Mr. Emmer pointed out, was about a third to a quarter of the fiscal efforts that this Congress made on a largely bipartisan effort to lift our economy to the point where it is today. The chairman said strong and well-recovered un- employment at 3.6 percent, so many jobs out there that many of them are going unfilled. Did we overshoot? Maybe we did, but the American Recovery Plan, this thing that cut childhood poverty in this country in half, was about a quarter to a third of the fiscal ef- forts. The other money was supported by President Trump, but, by the way, it is not those dollars that are still sitting in Americans’ bank accounts. It is not CARES Act dollars. No, that was supported by the Republican Party. It is only those dollars in the American Recovery Plan that cut childhood poverty in half. Energy prices— I read the Monetary Policy Report, and I will quote it: ‘‘Because of the Russian invasion of Ukraine, oil prices rose sharply.’’ I have been around here long enough to know that putting facts and truth out is like spitting into a hurricane, but it is important for the American people to understand that. Okay. Mr. Powell, I released yesterday, and I hope you got a copy, a White Paper on a central bank digital currency (CBDC). It is offered with humility, because we have a lot of issues to work out, but I hope you have had a chance to take at least a quick look at it. I wonder if you have any reflections, or, importantly, what are the next steps now that you have gotten commentary from lots of people? What are the next steps with respect to the Federal Re- serve thinking about a CBDC? Mr. POWELL. I printed it out, and I have it here. I have not had a chance to read it carefully, obviously, given all that is going on. But I think generally, we are doing a great deal of work. The Presi- dent signed an Executive Order and parts of the Administration are working on this. I think it is something we really need to ex- plore as a country. It should not be a partisan thing. It is a very important potential financial innovation that will affect all Ameri- cans. And our plan is to work on both the policy side and the techno- logical side in the coming years and come to Congress with a rec- ommendation at some point, and we don’t prejudge what that would be. I know your views are very positive on it, but I think one thing I did see in your report was the beginnings of thinking about how Congress might authorize it. And I do think that is a very, VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 17 very important aspect of this, and it is great to have Congress starting to think about that. Mr. HIMES. Thank you. I think I agree with that, and I think that has bipartisan support. In my remaining minute, I am going to ask you a question I ask you a lot, Mr. Chairman. We are obvi- ously seeing pretty dramatic swings in the financial markets. Money is no longer free. We are seeing that in the stock market, the high yield market, the equity markets, and cryptocurrency. In my very short remaining time, Mr. Chairman, what should we be focused on? What is concerning you with respect to systemic risk that may develop in the face of rising rates and rising inflation? Mr. POWELL. Basically, the financial markets have been func- tioning well, and the banking system, in particular, is very strong and well-capitalized, with lots of liquidity and a better under- standing and management of its risks. The place where there have been issues, and we don’t see them elevated at this point, has been illiquidity in some markets relative to where it had been histori- cally. Mr. HIMES. Any markets in particular where you worry about illiquidity? Mr. POWELL. No, I wouldn’t say that we are seeing anything that is particularly concerning. But I think sort of systemically, liquidity in the Treasury market has come down from where it was, and we have been looking for some time at ways to address that, but the markets are clearly functioning reasonably well. Mr. HIMES. Thank you. My time has expired. Chairwoman WATERS. Thank you. The gentleman from North Carolina, Mr. Budd, is now recognized for 5 minutes. Mr. BUDD. I thank the Chair. Chairman Powell, thank you again for being here. According to the Congressional Budget Office, the Federal Government will spend an average of $545 billion per year, which was the estimate before rates went up, and this is on inter- est payments on the $31 trillion of national debt. That $545 billion is more than we spend on the Department of Veterans Affairs. So, given that the national debt is currently at about 125 percent of GDP, would the Fed’s commitment to tackle inflation be limited by rising interest rates, making the servicing of the national debt even more expensive? Mr. POWELL. No, absolutely not. Mr. BUDD. Can you explain that? Mr. POWELL. We are not in a situation where we need to consider fiscal questions like that. The U.S. is on an unsustainable fiscal path, meaning the debt is growing faster than the economy, but it is not in an unsustainable position. We can service our debt, and the markets understand that, and we can conduct our policy with- out thinking about questions of fiscal sustainability, and we do. Mr. BUDD. When your colleague, Secretary Yellen, was before this committee, and I asked her about Federal debt, which was then about 105 percent of GDP, she said, ‘‘That is not a number that I think is fiscally irresponsible.’’ She also went on to say, ‘‘If interest rates are zero, we could substantially have a higher debt burden.’’ And in the formula in the following questions, she alluded to Japan and the fact that it could be about double of where we are now, meaning about $60 trillion of debt if you use her math. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 18 Do you agree with Secretary Yellen that having a national debt of over 100 percent of GDP is fiscally responsible, given that interest rates can change and that historically low-interest rates can’t al- ways be expected? Mr. POWELL. I guess I would say it this way. We are not on a sustainable path, and we haven’t been for some time, and that means simply that debt is growing faster than the economy, which by definition, is unsustainable. There will be a point at which it be- comes a problem of servicing the debt, buy we are not at that point. We are not close to that point, but we will need to get back to where revenues and spending are better aligned. We don’t need to pay the debt down. We just need to have the economy growing as fast or faster than the debt over a long period of time, and we must do that. I wouldn’t say any particular level. There is no level that I can point to where there is a lot of science behind it being a prob- lem, but we know that the path is not sustainable. Mr. BUDD. It is interesting that you alluded to growth being part of the solution. I want to talk about regulation for a minute, par- ticularly since the Biden Administration delayed oil and gas lease sales again this week due to environmental protests. So if we pur- sued policies to increase American energy production by approving more leases and building more pipelines to transfer that energy, and cut down on regulatory barriers to make it easier for folks to produce energy and produce anything, wouldn’t that make a real impact on energy prices, and inflation in general, without us need- ing to use the Fed to slow the economy with monetary policy to deal with inflation? Mr. POWELL. The whole set of questions around energy are really questions for elected people. We don’t have a mandate there. Obvi- ously, the more supply there is, the price of something can go down, but these are tradeoffs that you really have to weigh as elected officials rather than— Mr. BUDD. I will narrow it for just a minute. Do you believe that the vast amount of regulation is an impediment to economic growth? Mr. POWELL. I will say this. We try hard at the Fed to weigh the costs and benefits of regulation, and we do think it is important to think about it that way because there are benefits to regulation. But there are costs, and we don’t want the costs to be any higher than they need to be because that does weigh on economic activity, yes. Mr. BUDD. You talk about somebody trying to buy a home, and now they are questioning it because of the rise in mortgage rates, and I have heard for years that the 25 percent of the cost of a new home is due to regulation at some level. The point I am trying to make is that we need to be very cost-cautious with our regulations because it is constraining our growth and the growth, ultimately, which solves this fiscal problem. The point I am trying to make is that we have much better tools, like deregulation, which can free up supply rather than just monetary policy. And freeing up supply could largely solve the inflation problem for hardworking Ameri- cans and not send us into a recession. Again, I thank you for being here, and, Madam Chairwoman, I yield back. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 19 Chairwoman WATERS. Thank you. The gentlewoman from Iowa, Mrs. Axne, who is also the Vice Chair of our Subcommittee on Housing, Community Development, and Insurance, is now recog- nized for 5 minutes. Mrs. AXNE. Thank you, Madam Chairwoman, and thank you, Chair Powell, for being here. It is good to see you. We have been talking inflation. Of course, we know it is hurting Iowa families and families across the country, and all of us here have an absolute responsibility to address this. And I appreciate the comments of my colleague, Representative Himes, because I have sure heard a lot of talk about how bad inflation is from my colleagues over there on the other side of the aisle, but I sort of haven’t heard much about the solutions that they want to provide. So I am here to work on those solutions, and I am glad to have you here to talk with us about that. We actually need to reduce inflation, and we have to figure out what is driving it. The San Francisco Federal Reserve Bank just put out some re- search yesterday looking at how much inflation was driven by sup- ply versus demand. What they found was that supply factors are responsible for more than half of the current level of inflation. And, of course, I don’t need to tell you that while prices increasing are hurting people across a heck of a lot of sectors, gas prices have really been driven up over the last few months. Chair Powell, on gas prices, could you talk about some of the supply constraints that have pushed gas and energy prices higher recently? Mr. POWELL. Sure. Two big things would be: one, the price of oil is set globally, and we just take that price; and two, the spread that refiners earn. So, if a refinery is at capacity and spreads are high, then you have a high spread there. And we know that the price of oil went up quite a bit, started going up early in the year, and it has now come down a little bit in the last week or so. But those are the two things that have contributed to the spike in gas prices that we saw. We did see gas prices moving up, but they real- ly moved up quite sharply beginning in the early parts of this year as the war came into focus. Mrs. AXNE. Thank you. You talked about a couple of pieces where folks are making more money, and you talked about the re- fining process in that crack spread, and I think they are around $60 right now. So basically, what is happening is they are making more money because supply is down. Would you agree that increas- ing the supply of gas could meaningfully lower prices? Mr. POWELL. I would say it is hard to argue with that, sure. Mrs. AXNE. Okay. Well, the U.S. hasn’t built a major refinery since 1977, so, of course, as we know, this isn’t a recent issue. It is a long-term lack of investment with so many parts of our econ- omy, and you actually touched on that earlier. Now, here is the question I would like to ask you. Will raising interest rates help increase supply here with fuel, and are there other economic tools to do that? Mr. POWELL. No. Really, we can’t have any effect on the price of oil or certainly the supply of energy. And the tools are not in our hands. Mrs. AXNE. Okay. Thank you for pointing that out. I know that the Fed absolutely wants to play a role in bringing inflation down, VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 20 but I want to make sure that we are looking at those solutions and trying to understand what better tools we have. Are there better options out there that you could suggest right here? Mr. POWELL. Honestly, we are an agency with a narrow, but im- portant, mandate and a set of tools, and our focus is on using our tools. We think there is a job to do on demand, and I don’t see us giving advice to Congress or other agencies on how they might use their tools. Mrs. AXNE. Okay. I appreciate that, and hopefully, at some other time, we can talk a little bit further about that. I want to move on to housing. In the 2010s, we saw less homes built than in each of the previous 4 decades, and we are more than 5 million homes short of where we should be. Boy, do I see that all over Iowa, in small towns, in particular. I have talked to busi- nesses that want to expand, but they can’t do so because there are not enough houses there, and so housing is one of the most sen- sitive areas relative to interest rates. I want to ask the same thing here: Will raising interest rates help supply there, and are there other tools that we should be looking at to do that? Mr. POWELL. I would agree with you there is a problem with longer-term housing supply and the difficulty of creating adequate housing. What our tools can do is, in the near-term and medium- term, they can restore a better balance between demand and sup- ply in the housing market. You have had extraordinarily-high housing price increases really across the country over the last cou- ple of years, and that is because of a lot of demand and very low rates. And you are seeing the housing sector slow down to some ex- tent because of higher mortgage rates now. Mrs. AXNE. Do you have anything that should be on our radar or that we could be looking to do to assist with this? Mr. POWELL. I do think that these are issues for Congress around housing supply. If you talk to builders—and we do talk to builders; we had a group in last week—they will talk about the longer-term issues such as lack of supply, lack of workers, lack of appropriate zoning, and things like that. These are national issues. Mrs. AXNE. Thank you so much. Chairwoman WATERS. Thank you. The gentleman from Indiana, Mr. Hollingsworth, is now recognized for 5 minutes. Mr. HOLLINGSWORTH. Good morning. It is a pleasure to speak with you again. Before we get started on my questions, I just want- ed to comment on Representative Axne’s testimony, or conversa- tion, or questions. I love the fact that she is beginning to recognize how heavy the regulatory burden has been in the refining space that has led to an underinvestment, and the Biden war on energy, especially on American-produced energy, continues to bear the fruit that they expected, and that is a deep concern for Americans who are paying more at the pump. We collectively find ourselves in the present situation because we failed to anticipate the future, even if that future is inherently un- certain and probabilistic. You said a few moments ago that we have a job to do on demand. I like that. And in the recent past and present, I feel like the policy signals have been unambiguous for the Fed. Inflation is at a 40-year high, the labor market is robust, unemployment is bouncing along at multi-decade lows, and eco- VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 21 nomic growth has been very high, but I worry that that lucidity is a luxury that is fleeting. I believe the future will be more ambig- uous as we head into a time where economic growth seems to be approximately zero, and labor market weakness is beginning to emerge. I think those policy signals will be less clear going forward. Eco- nomic growth in Q1 was negative, albeit for reasons I think you called technical in nature, but still negative, nonetheless. Q2 eco- nomic growth is currently projected to be approximately zero ac- cording to the GDPNow tracker and many economists. Weakness in the labor market, while nascent, is beginning to emerge. Still, inflation as a lagging indicator remains, as you put it earlier this week, very, very high. I have certainly praised the Fed’s tardy, yet sudden, total focus on price stability, which will come, as you said, at the cost of aggregate demand reduction. Technical reasons or not, America will feel aggregate demand reduction where GDP growth is already zero as a recession. I am curious to hear your thought process in an environment where inflation is steadying and/or coming down, but still at mul- tiples of your target, and unemployment is escalating quickly, and economic growth is negative. Tell me a little bit about how you will think about that environment and approach that from a policy and rate-setting perspective? Mr. POWELL. I guess I would start by saying that is not the envi- ronment we see or expect. We actually do think that growth this year, in the second half of this year, should still be fairly strong. It is coming down from the very high reopening levels of last year, but the first quarter was somewhat anomalous. Private spending was actually very healthy— Mr. HOLLINGSWORTH. Tell me about how you think about that environment? I assume that you could be correct, but there is a chance you could be incorrect about that soft landing prediction. Mr. POWELL. The way our tools work, what we are trying to achieve is to have a moderation in demand so that supply can catch up, which will take pressure off of resource utilization, and infla- tion can come down. That is what we are trying to achieve. Mr. HOLLINGSWORTH. But if inflation were to come down after that fact, demand will come down first, inflation will lag after that where inflation remains— Mr. POWELL. That is right. Mr. HOLLINGSWORTH. —multiples of your target, but unemploy- ment, because of that sagging demand, goes up. Economic growth is depressed because of that sagging demand. Tell me how you will think about that environment? Mr. POWELL. The way we think about it from a policy standpoint is, of course, we raise interest rates and shrink the balance sheet. That affects broad financial conditions and that affects the econ- omy. The question we will be asking is, is our policy rate—that is the thing we control—at the right level so that it is affecting finan- cial conditions in the economy in the way that we need and intend? Mr. HOLLINGSWORTH. I want to know how you intend to affect then where unemployment is going up and economic growth is neg- ative, but inflation remains high? VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 22 Mr. POWELL. In that hypothetical situation, I think you would say that would be a setting in which inflation could be expected to come down. As I have said, we would like to see inflation coming down as well. So, you have choices. Mr. HOLLINGSWORTH. So you could move rates down or steady rate escalations in advance of inflation hitting your target as long as you saw it beginning to come down, if economic conditions or your other mandate for employment begin to show weakness? Mr. POWELL. As one of my colleagues used to say at every meet- ing, it is the same question: Do you raise rates, leave them the same, or bring them down? I think we would have to see what is happening. We will try to make good judgments in real time, but the main thing is we can’t fail on this. We really have to get infla- tion down to 2 percent. We are going to want to see evidence that it really is coming down before we declare any kind of victory, so I think we would be reluctant to cut. Mr. HOLLINGSWORTH. This will have real cost to Americans, so I want to make sure that we are forward-thinking about what is going on in the real economy, not just watching a lagging indicator that is inflation. And with that, I will yield back. Chairwoman WATERS. Thank you. The gentleman from New Jer- sey, Mr. Gottheimer, who is also the Vice Chair of our Sub- committee on National Security, International Development and Monetary Policy, is now recognized for 5 minutes. Mr. GOTTHEIMER. Thank you, Madam Chairwoman. Mr. Chair- man, the most recent Consumer Price Index (CPI) report indicated that the largest component of the CPI, shelter, both owned and rented, has increased 5.5 percent since last year. Estimates I have seen show apartment rental cost of 15 percent or more over the last year. Do you believe the CPI measure of shelter costs understates the actual increase in housing costs? And do you have any sugges- tions for actions Congress can take to lower housing costs for Americans in the short- and long-term? Mr. POWELL. There is some sense in which it might understate costs because it is not capturing leases that haven’t turned over yet, right? So, it is really looking at leases that are turning over. Mr. GOTTHEIMER. So, it is probably a higher rate? Mr. POWELL. Overall, we think it is a decent measure. And also, remember that in the CPI, housing services has a weight that is doubled in the measure that we look at Personal Consumption Ex- penditure inflation. We think that is a better, more-sophisticated representation of the inflation that is actually happening in peo- ple’s lives, so we would tend to look at that. Mr. GOTTHEIMER. Thank you, Mr. Chairman. I do want to shift to another issue that is covered in your June report. I have been engaged in discussions on cryptocurrency policy and have long warned that a run on stablecoins has the potential to destabilize financial markets. My concerns were realized in part last month when the so-called stablecoin, Terra, collapsed. Your report high- lighted the danger of that event and called for congressional action to protect consumers and financial markets. My draft legislation, the Stablecoin Innovation and Protection Act, would establish a definition and requirements for a qualified stablecoin, defined as cryptocurrencies redeemable 1-to-1 for U.S. dollars. This legislation VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 23 would reduce financial instability in the markets, protect con- sumers, and support innovation and fintech. It would also create a pathway for banks and nonbanks to acquire qualified status for the stablecoins they issue. With Federal oversight, do you believe non-bank entities can be reliable issuers of qualified stablecoins if they can prove they are fully backed by cash or cash equivalents? Mr. POWELL. As you know, we have recommended that Congress look at this, and there are many, many approaches, including yours. The President’s Working Group (PWG) did recommend that stablecoins be issued by insured depository institutions. I think it is great that Congress is looking at different approaches and evalu- ating those questions. What you really want, though, is you want to be sure that those entities are appropriately regulated, and in our view, in some sense, at the Federal level. I think it is going to be a question for Congress, what the PWG came up with, but I think there are different approaches. Mr. GOTTHEIMER. Do you have any views on whom the primary regulator should be at all? I think that is all up to Congress. Like with the OCC, they can pose a problem with the OCC being a pri- mary regulator. Mr. POWELL. For national bank charters, yes. But stablecoins are used now principally in the capital markets, as you know, around the platforms, the digital finance platforms, and that is more in the bailiwick of the SEC. If they were going to be payments stablecoins, we should be involved, and if it is going to be about banks getting involved, it will be the banking regulators. I think we’re going to be really blessed by a plethora of regulatory agencies in the financial sector, so that will need to be sorted out. Mr. GOTTHEIMER. Do they have something, given the challenges we have had in the last months, that is something we have to move quickly on? Are you concerned with how long it is taking Congress to actually act there? Mr. POWELL. I think it is very important. It is no different than any other big technological innovation, airplanes, for example. There comes a point at which a new regulatory framework is need- ed to protect the public and preserve innovation and competition, foster support, all of that. But that is coming for digital finance, and I think I am encouraged that there are now a bunch of bills and proposals and that Congress is working on this. I think it is important that it get done quickly, because as we have seen, these companies can grow really quickly, and we have also seen that they can have reverses as well. Mr. GOTTHEIMER. And you think, overall, the ideal role of the Fed in overseeing stablecoins is what? Ultimately, long-term, what is the role of the Fed? Mr. POWELL. One question is around CBDCs. Do we want a pri- vate stablecoin to wind up being the digital dollar? And I think the answer is no. If we are going to have a digital dollar, it should be done by us. We don’t know that we need a digital dollar as such yet, but I think that it should be government-guaranteed money, not private money, that is really created for the benefit of the pri- vate issuer, so that is one thing. I think also, we are very impor- VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 24 tant in payments, so anything to do with payments that the public is involved in, we should be involved in that, too. Mr. GOTTHEIMER. Thank you so much. I yield back. Thank you. Chairwoman WATERS. Thank you very much. The gentleman from Tennessee, Mr. Rose, is now recognized for 5 minutes. Mr. ROSE. Thank you, Chairwoman Waters and Ranking Mem- ber McHenry, for holding the hearing today, and thank you, Chair Powell, for being here with us. A few moments ago, Mr. Himes noted that the American Recovery Plan—I think he meant the American Rescue Plan—is not mentioned in the Monetary Policy Report. Chair Powell, is it Federal Reserve practice to comment on bills passed by Congress in the Monetary Policy Report? Mr. POWELL. No. Mr. ROSE. Turning to something that we have obviously talked a lot about already today, inflation and rising prices on things like food and fuel are having a devastating impact on people all across Middle Tennessee, and indeed, across the country. You have told us that you will not comment on fiscal policy, but you have also previously urged Congress to support fiscal spending, some of which caused this inflation, in my view. Democrats are still push- ing a reckless spending proposal, although reports are that it will be smaller than the one they tried to ram through Congress late last year. Chair Powell, will you commit to pushing back as strongly against reckless spending proposals that would exacerbate the cur- rent inflation as much as you pushed Congress to support more fis- cal spending during the pandemic? Mr. POWELL. I didn’t support any particular bill, but I did say that there was more to be done. And by the way, I completely ended that practice at the end of 2020 or 2021. Anyway, 2020, I stopped. I completely stopped talking about that publicly at all, and the reason I did it before was, first of all, I was being encouraged by leadership on both sides of the Hill in both parties. They were asking me for ideas—don’t you think we need to do something more, can you help us, and that kind of thing. But that is all done, that is over with, and the Fed should not play or seek to play a role in fiscal policy. We have our own mandate. We sure need to stick to that now. Mr. ROSE. In light of that statement, would you agree with this statement that the analysis that the Fed had through March of last year, and that the Administration, to some extent, continues to ad- vance with respect to inflation, and the policy prescriptions have proven to be far more transitory than the inflation itself? Mr. POWELL. If I understand your question, we did think that these were going to be passing forces. We thought that the shocks that were hitting, supply side shocks, we thought they would be like oil shocks have been, where they come and go, and other sup- ply side shocks, commodity shocks of various kinds. As the course of 2021 went on, it became increasingly clear, particularly in the fall, that that wasn’t going to be the case. We weren’t going to see that kind of progress, and we pivoted, 7 months ago now, to ad- dress this with our policy tools. I think our judgment in real time proved to be incorrect, but it was not an irrational judgment, and it was one that was very wide- VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 25 ly held at the time by other central banks and economists gen- erally, but it wasn’t about economics. It was, how long is this going to last? Are these things that are happening to our economy, which were unprecedented, going to get better, for example, millions of people dropping out of the labor force, or the problems we have with the global supply chains? There was no model of that. We can’t look at the last 20 times it happened. So for sure, in hind- sight, it was not transitory. Mr. ROSE. Thank you. The Committee for a Responsible Federal Budget estimated that canceling Federal student loan debt held by Americans could increase the inflation rate as much as a half a percentage point, and would add $1.6 trillion to the national debt. This estimate notably also did not incorporate the possible effect that student debt cancellation would have on increased college tui- tion prices. Chair Powell, has the Fed done any analysis on the inflationary impact of these proposals to forgive student loans being actively considered by Congressional Democrats and the Administration? Mr. POWELL. Not that I know of. We would look to the Congres- sional Budget Office (CBO) and legislation. We tend to start to put it in our models of the economy when we think there is really, real- ly likely going to be legislation. Mr. ROSE. Generally, though, would you expect forgiving $1.6 trillion in debt, whether it is student loan debt or credit card debt, to have an inflationary impact? Mr. POWELL. Again, I am going to leave that to CBO to score and also the Office of Management and Budget (OMB). We do not rou- tinely score congressional proposals. It would get us involved in po- litical things, and would we be independent then? To be inde- pendent, we need to be out of these very difficult fiscal issues, which are really your job. Mr. ROSE. Thank you, Mr. Powell. I yield back. Chairwoman WATERS. Thank you. The gentlewoman from Massa- chusetts, Ms. Pressley, is now recognized for 5 minutes. Ms. PRESSLEY. Thank you, Madam Chairwoman. Chairman Pow- ell, without question, the Fed has a role to play in healing our economy, but as with any treatment, the wrong medication can cause even more harm and make the patient more ill. Chairman Powell, at your latest press conference, you stated, ‘‘Wages are not principally responsible for the inflation we are see- ing.’’ I certainly agree with that assessment, as do many econo- mists. Considering that wages are not driving inflation, why is the Fed addressing inflation with tools which primarily impact wages, such as interest rates? Mr. POWELL. Our tools principally impact inflation, not nec- essarily wage inflation, so our job is price inflation. But I will say on wage inflation, the issue is that over time, wages, over time, looking forward, are very important, particularly for service compa- nies, where most of the costs are really in wages. And we all love to see big wage increases, but with these increases that we have been having, some of them are just substantially bigger than would be consistent with 2-percent inflation. Ms. PRESSLEY. Thank you. Throughout today’s hearing, to that point, you have indicated that the Fed doesn’t have more precise VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 26 tools at your disposal. Chairman Powell, the root causes of the in- flation we are seeing are supply chain disruptions outside of the Fed’s control, whether it is COVID-19 lockdowns in China, or the Russia-Ukraine War, which is why this knee-jerk response to raise interest rates is so alarming. The Fed cannot control the factors causing inflation, but this policy choice would plunge millions of people back into unemployment, dampen wage growth, and tip the economy into a recession. There is an old adage, Chairman Powell, ‘‘If all you have is a hammer, everything looks like a nail.’’ You have recently said the Fed’s tools, like interest rates and the balance sheet, are famously blunt and lack precision. In that case, do you agree that the Fed needs new tools that are more precise to better fulfill its statutory mandate of price stability and maximum employment? Mr. POWELL. No, I don’t think we are looking for new tools. I would just say that a big part of the inflation that is happening is really not going to be affected by tools, but a big part of it is going to be affected by our tools, and that is the part that is related to demand. Ms. PRESSLEY. But Mr. Chairman, but by your own account, you stated on the record that the Fed’s current tools are ill-suited to deal with the inflation we are seeing. Perhaps now is the time to expand the Fed’s toolkit to meet the unique moment that we find ourselves in. For example, one tool that could help the Fed tailor a more precise response to inflation is direct credit regulation. This would allow the Fed to regulate the availability of credit in the spe- cific sectors of the economy experiencing high inflation without im- pacting other sectors. Would you support Congress passing legisla- tion to give the Fed more precise tools to tackle inflation such as this idea? Mr. POWELL. That is not something we would seek. Of course, it is up to Congress to make those decisions. Ms. PRESSLEY. But it is your own admission that your tools are too blunt and not precise enough. What additional tools do you be- lieve the Fed needs to respond more precisely to inflation? Mr. POWELL. Again, our tools are blunt, but they are the right tools to deal with broad aggregate demand, and that is a more im- portant determiner of inflation than energy and food prices, as painful as energy and food prices are. The bigger piece of it is re- lated to demand. We can’t help with energy and food prices, to your point, but we can help with aggregate demand, and we do that through the tools we have. We are not seeking a deeper involve- ment in the economy like you are talking about, but, again, that is a question for Congress. Congress can change our toolkit or our mandate. Ms. PRESSLEY. In this moment of overlapping crises from supply chain disruptions to high inflation, I do believe we need precise policies that respond to the needs of the American people. The Fed knows that raising interest rates will not address the root causes of rising prices, but they will just keep doing so even at the cost of millions of working-class people’s livelihoods. We need a more so- phisticated toolkit for the era we are in to truly heal our economy and tackle inflation responsibly. Thank you. I yield back. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 27 Chairwoman WATERS. Thank you. The gentleman from Wis- consin, Mr. Steil, is now recognized for 5 minutes. Mr. STEIL. Thank you, Madam Chairwoman. And thank you for being here, Mr. Powell. I appreciate it. Just a point of clarification, you noted that you ended your public statements in support of fis- cal stimulus by the end of 2020. Is that correct? Mr. POWELL. Yes. Mr. STEIL. And so it would be after that, that the Democrats, under one-party control, passed $1.9 trillion of additional fiscal stimulus after you had already stopped making public statements in support of additional fiscal stimulus. Do I have the timeline cor- rect? Mr. POWELL. Yes. Mr. STEIL. I am not asking you to opine. I just wanted to make sure I had the timeline correct. Mr. POWELL. I took no position publicly or privately, and neither should the Fed Chair do so. Mr. STEIL. Understood, but your public statements in support of additional fiscal stimulus ended in 2020. Democrats, under one- party control, passed $1.9 trillion of fiscal stimulus after that pe- riod of time. I just want to make sure of the timeline. I understand. Let me be cognizant of the time we have, and you have noted that you think the Fed should not play a role in fiscal policy. I have grave concerns about the fiscal policy that we have seen playing out in Washington. I am not asking you to opine on that. Looking at 2021, we saw real GDP growth above 5.6 percent in that year. Is that correct? Mr. POWELL. Yes. Mr. STEIL. Over 5 percent, a reasonably-robust rate, and at that period of time, in the year 2021, we saw the Fed’s balance sheet increase by about $1.5 trillion. Is that correct? Mr. POWELL. That sounds about right. Mr. STEIL. So in that period of time, where we were seeing rea- sonably-robust economic growth, the Federal Reserve was con- tinuing to build its balance sheet to a tune of $1.5 trillion. So, dur- ing the year 2021, the Federal Reserve ultimately purchased about 54 percent of all Federal debt issued by the Treasury. Is that accu- rate? Mr. POWELL. I don’t know that. If you have the number in front of you— Mr. STEIL. I have the number in front of me. I think it is worth- while. Roughly half of the Federal debt that was issued in 2021 was acquired by the Federal Reserve and placed on the Federal Re- serve’s balance sheet. My concern is that it hid the real cost of bor- rowing, borrowing that was being driven by the Biden Administra- tion at that time. And my concern is that the Federal Reserve, by increasing their balance sheet by $1.5 trillion in a period of time when Democrats put forward a gigantic stimulus package, after you had stopped your public calls for requesting additional fiscal stimulus, that is all part of the problem. It is both the fiscal policy and the monetary policy coming together. But let me keep going here for a moment. We paid, and we, the Federal Government, paid in debt payments last year, $580 billion. Is that correct? Mr. POWELL. I don’t know. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 28 Mr. STEIL. That is the number I have. It is about 5.8 percent of our budget fiscal side, and the projections of CBO, interest over the next decade, one of the CBO projects, it will triple to $1.2 trillion, but that is assuming Federal debt remains in a range of 2.4 per- cent to 3.8 percent. That is the CBO’s projections to get to debt payments increasing to $1.2 trillion by the end of the decade. We are sitting here at a period of time when the 10-year Treasury yield has crossed 3 percent, 3.16 percent, I believe, as of yesterday. A year ago, it was 1.48 percent. So, we are already approaching the high-interest-rate threshold that CBO has for interest on the debt to triple. Do you project that interest payments on the debt, the interest payment number that is impacted by the interest rate set by the Fed, will remain in a range of 2.4 to 3.8 percent, or do you believe that it will be dramatically above that? Mr. POWELL. We don’t publish projections on Treasury rates. Mr. STEIL. So as interest rates are moving, as you are doing, I think appropriately so, to address the inflation environment that we are in, the Federal Reserve doesn’t project the cost on the debt moving forward? Mr. POWELL. Internally, we don’t publish, this is what I said, but internally, of course we have a path for the 10-year, for example, and for many, many years, it has always showed rates returning to levels even where we are or even higher. That is what goes into our models because we assume over time, for example, that we are going to be shrinking our balance sheet in the range of a trillion dollars a year in the coming years, so that will put more supply out. That should put some upward pressure on rates. It is not our business to project this publicly, but our assumption is that rates will return to levels that are somewhat higher. Mr. STEIL. Let me, for the record, state that I am very concerned that we are going to see interest rates remain high. The Committee for a Responsible Federal Budget notes that 50 basis points is $143 billion of year-end debt. I am concerned that we are on a path that is very unstable. I appreciate you being here. Madam Chairwoman, I yield back. Chairwoman WATERS. Thank you. The gentlewoman from New York, Ms. Ocasio-Cortez, is now recognized for 5 minutes. Ms. OCASIO-CORTEZ. Thank you so much, Madam Chairwoman, and thank you, Chairman Powell, for coming in to speak with us today. Chair Powell, in the summer of 2019, which admittedly was a different world, during a Financial Services Committee hearing, you related to me that, ‘‘I would look at today’s unemployment as well within the range of plausible estimates of what the natural rate of unemployment is.’’ Do you recall what the unemployment rate was around that time in 2019? Mr. POWELL. I want to say 3.5 percent. Ms. OCASIO-CORTEZ. Yes, it was 3.5 percent. And what is the cur- rent unemployment rate today? Mr. POWELL. 3.6 percent. Ms. OCASIO-CORTEZ. 3.6 percent. You also said that when unem- ployment went way up, you didn’t see inflation go way down. So, you don’t see inflation reacting to unemployment the way it does VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 29 because inflation seems very anchored. Again, that was at that time. Chair Powell, briefly, yes or no, would you say that some of the contributing factors to today’s inflation include ongoing supply chain issues, including volatility of commodity prices as a result of the ongoing conflict in Ukraine, and companies also raising prices because they can? Mr. POWELL. I would say on supply side issues, for sure those are playing an important role. Ms. OCASIO-CORTEZ. And am I correct that American workers’ wage gains have actually trailed inflation? In other words, while the cost of goods went up by 8.6 percent, on average, wages did not increase by that much? Mr. POWELL. It depends. Some people at the lower end of the spectrum actually have been getting positive real-wage gains. For most people, though, inflation has been higher than their wage in- creases. Ms. OCASIO-CORTEZ. So on average, we have a wage growth at about 6.1 percent, so average wages are trailing inflation. It does seem that American workers are not primarily responsible for the inflationary issues that we are seeing today. But despite this, we are seeing some comments from individuals, like former U.S. Treasury Secretary Lawrence Summers, who earlier this year said that in order to contain inflation, the U.S. needs 5 years of unem- ployment above 5 percent, or 1 year of 10-percent unemployment. Do you agree with that assessment? Mr. POWELL. I understand how that number can be arrived at or derived, but I think there is so much uncertainty and, in par- ticular, the answer is going to depend to a significant extent on what happens on the supply side. If we do get these supply side problems worked out, which I think is certainly going to happen in time, then you wouldn’t see anything like that. But it is a highly- uncertain time, and our intention, of course, is to bring down infla- tion while keeping the labor market strong. Ms. OCASIO-CORTEZ. I think it is important to drive home what 10-percent sustained unemployment would look like in this coun- try. For context, we didn’t even reach 10 percent during the Great Recession. We did experience 10-percent unemployment in 1982 fol- lowing the Volcker shock. But in this market, to get to 10-percent unemployment would require about 10.5 million additional people out of work, and historically, we know that Black unemployment is usually double that of White unemployment, correct? Mr. POWELL. Yes, it tends to move at twice the speed, both up and down, but certainly moving up. Ms. OCASIO-CORTEZ. So when the former Treasury Secretary says he wants 10-percent unemployment overall, he is also saying that we need Black unemployment of nearly 20 percent or implies that. But, Chair Powell, I do think that despite the tools that you don’t have, Congress does have tools as well. Would you say that the fol- lowing actions granted in the scope of Congress could be deployed to impact inflation using antitrust laws against companies that are raising prices using their market power? Mr. POWELL. Sorry. I didn’t hear the last part. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 30 Ms. OCASIO-CORTEZ. Would using antitrust laws against compa- nies that are raising their prices have an impact on anti-trust? Mr. POWELL. Sorry, anti-what laws? Ms. OCASIO-CORTEZ. Antitrust. Mr. POWELL. Antitrust laws, okay. Sorry. Ms. OCASIO-CORTEZ. No worries. Mr. POWELL. The acoustics in here are difficult. Ms. OCASIO-CORTEZ. No worries. Would that have an inflationary impact? Mr. POWELL. It is really hard to say. Ms. OCASIO-CORTEZ. Would subjecting those companies to a windfall profits tax have a potential impact on inflation? Mr. POWELL. Again, I don’t— Ms. OCASIO-CORTEZ. And would requiring government contrac- tors to keep a lid on their pricing have certain impacts on inflation? Mr. POWELL. There is a long history of price controls when infla- tion has been high, and it was not a successful one. Really, it comes down to getting demand and supply in alignment. Ms. OCASIO-CORTEZ. And if the Fed’s tools mostly impact de- mand, but most of those inflationary issues could be potentially im- pacted by supply, how high do you think the Fed would have to drive unemployment to actually have an impact? Mr. POWELL. That is going to depend on a lot of things, and ideally, we can raise rates, and it is very important that we get in- flation back down, particularly for people in the margins of society who are suffering the most from inflation. That may be a longer conversation, again. Ms. OCASIO-CORTEZ. Thank you. Chairwoman WATERS. Thank you very much. The gentleman from South Carolina, Mr. Timmons, is now recognized for 5 min- utes. Mr. TIMMONS. Thank you, Madam Chairwoman, and thank you, Chairman Powell, for being with us today. Congratulations on being confirmed to your second term as Chair. You have some rocky times ahead. I wish you luck. The last time you were here, we discussed how rising interest rates really inflate debt servicing costs for the Federal Govern- ment. And I know what you are going to say, that is a concern for fiscal policymakers, the Congress, to take into account, not the Fed, and that is mostly true. But I still think it is worth everyone being fully aware of just how costly servicing our debt will be now that interest rates are returning to historically-normal levels. According to CBO, interest payments on the debt are the fastest- growing part of the Federal budget. CBO projects that servicing our debt will cost taxpayers $8.1 trillion of the tenure budget win- dow—$8.1 trillion. And their inflation assumptions projecting inter- est rates are lower than current levels, and quite a bit lower than where rates are likely headed to get inflation under control. And I thank you for your efforts to get inflation under control, but for every half-percentage point rate hike, that is an estimated $133 billion of annual increases. I am going to say that again: a $133 billion in annual increase in debt servicing costs. That is just a staggering amount of money. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 31 So we, Congress, must get our fiscal house in order. We have to. There is no other option. The dollar’s position in the world as the global reserve currency is solid, and there are no immediate signs of that changing, but if we continue on our current trajectory, that will not always be a given. My question is, are you worried that if our current fiscal path continues—which I should note with each rate hike, looks worse and worse—that the dollar’s position in the world could be challenged in the long term? Is that a concern? Mr. POWELL. Certainly, in the long term, the dollar is the reserve currency, and I don’t see it as particularly under threat at the mo- ment given the advantages that we have, which are many. But you are right that the U.S. Federal budget is on an unsustainable path, and we will have to deal with it, and the sooner, the better. Unsustainable just means that the debt is growing faster than the economy, which, by definition, over time, can’t be sustained. Mr. TIMMONS. Thank you. For the record, I also want to follow up—you stated the following as Congress considered the Biden stimulus, ‘‘In addition, workers and households who struggled to find their place in the post-pandemic economy are likely to need continued support. The same is true for many small businesses that are likely to prosper again once the pandemic is behind us.’’ That was from your speech on February 10, 2021. I just wanted to add that in for the record. One final question. During a meeting last week at the Inter- national Association of Insurance Supervisors (IAIS), the IAIS issued a consultation paper on comparability criteria, looking at the use of the International Capital Standard (ICS) versus the ag- gregation method. As you know, the U.S. has committed to using an aggregation-like approach here in the U.S. through the National Association of Insurance Commissioner’s (NAIC’s) group capita cal- culation and the Fed’s proposed building-block approach. Moreover, the EU and the U.K., through their covered agreements with the U.S., recognize these approaches to group capital. Nevertheless, In- surance Europe, a federation of European insurers representing more than 95 percent of the European market, takes the view that there cannot be two versions of an International Capital Standard. My question is this: Will you continue to advocate and support the aggregation method as an alternative to the International Cap- ital Standard? Mr. POWELL. I am a little rusty on that, but I will say this: I know that we are strongly committed to capital standards that work for U.S. insurance companies. Mr. TIMMONS. I get that, but I guess what I am getting at is we have a different way of regulating insurance here in the United States. We all know that, and it works for us, and we do not need to let these international bodies change our way of doing things. We need you to stand up for the American way of doing things and for American businesses. Can you commit to doing that? Mr. POWELL. I think that is what we are doing, so yes. Mr. TIMMONS. Okay. Thank you. Madam Chairwoman, I yield back. Chairwoman WATERS. Thank you. The gentleman from Massa- chusetts, Mr. Auchincloss, is now recognized for 5 minutes. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 32 Mr. AUCHINCLOSS. Thank you, Madam Chairwoman. And wel- come, Chairman Powell. I want to start by asking you about infla- tion expectations, which, as you obviously know, can be very dif- ficult to dislodge once they are anchored in the mindset of con- sumers, and what the Fed can do both to address inflation, but also to convince Americans that inflation is going to be lowering in the medium term, and thereby prevent inflation expectations from get- ting anchored? Mr. POWELL. If you look at inflation expectations, and of course we measure professional forecasters, households, market-based break-evens, and things like that, a broad range of things, you do see that people expect inflation to be high in the very near term, but they expect it to come down fairly quickly and get back to nor- mal. So as a general matter, the evidence is clear that people do expect inflation to come back down to levels that are consistent with our price stability mandate, but we haven’t had a test like this. I would say we haven’t had an extended period of high infla- tion for a long time, so it is not a comfortable place to be. Short- term inflation expectations are higher, and it adds to our desire to move expeditiously and with force to get rates up and then ulti- mately to get inflation down. Mr. AUCHINCLOSS. Building on that one degree removed, the only thing more painful than expected high inflation is unexpected high inflation. And it makes the degree to which businesses and con- sumers do not have confidence in the Fed’s ability to control infla- tion or the U.S. Government at large, makes it harder for them to make capital investments in the long term, makes it harder to do wage negotiations. Is there a measure of the degree of confidence that both business and consumers have in the ability of inflation to remain low that you are tracking so that we can try to measure the degree of confidence people have in not having to see unex- pected inflation in the future? Mr. POWELL. First, I agree with it. Ultimately, the point is that if the public retains confidence that inflation will come down, their expectations remain anchored, then it will come down. We think that is how it works. Mr. AUCHINCLOSS. Self-fulfilling? Mr. POWELL. Right. By many, many measures, and we track them all. We put them all in one big measure called the Index of Common Inflation Expectations. We do that, and we publish it at various times. Mr. AUCHINCLOSS. It strikes me that— Mr. POWELL. And we basically send the message that essentially, yes, inflation expectations are anchored, but as I said, that is good, but it is not enough. We need to get inflation down because inevi- tably, over time, these expectations are going to be under pressure. Mr. AUCHINCLOSS. It seems like you also want to track volatility within that Index of Common Inflation Expectations to see how much confidence people have that they are not going to see unex- pected inflation. Mr. POWELL. Yes. We look at the distribution, and if there are some small signs, concerning signs, then we just can’t allow that. Ultimately, our whole framework is about keeping inflation expec- VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 33 tations well and truly anchored so that inflation will return to that anchor. Mr. AUCHINCLOSS. And your credibility, and that is autocatalytic in inflation expectations, so I think it is critical that the businesses and consumers have that confidence. Mr. POWELL. Absolutely. Mr. AUCHINCLOSS. Can you explain how quantitative tightening, I guess we would call it now, is going to play into that unrolling, the quantitative easing of the last 10 years? Mr. POWELL. Sure. It is quantitative easing in reverse. And what quantitative easing does is, it reduces the supply of risk-free, longer-term assets, and that tends to drive rates down as people want those. So when we shrink our balance sheet, what happens is the public will be holding more of that paper, and we won’t be holding it, and that should have some upward pressure over time. Markets are forward-looking, so they are already pricing this in. Mr. AUCHINCLOSS. And you don’t project any changes in how are you going to do QT? Mr. POWELL. We put out a plan. We thought very carefully about it. We have announced it. Markets have seen it, and it is sort of priced in and I think we would intend to keep to that plan. Of course, one of our principles is that we are always going to be flexi- ble if that is warranted. Mr. AUCHINCLOSS. Last question for you in my final 30 seconds here, Chairman Powell. Can you give us an update on FedNow and your plans for access both to established banks as well as to finan- cial technology companies? Mr. POWELL. FedNow is supposed to go live next year. We be- lieve we are on track to do that. We have people working really hard on it. I didn’t catch the last part of the question. Mr. AUCHINCLOSS. How are you going to make access available? Is it going to be just for certain types of banks? Is it going to be for financial technology companies? How are you going to adju- dicate access? Mr. POWELL. That is something we are looking at. Mainly, it is for the broad sweep of banks, and we will have to look at going be- yond that. Mr. AUCHINCLOSS. I yield back. Chairwoman WATERS. Thank you. The gentleman from South Carolina, Mr. Norman, is now recognized for 5 minutes. Mr. NORMAN. Thank you, Chairwoman Waters. Chairman Pow- ell, welcome. Would you agree that housing is a leading economic indicator on the health of the economy or on the direction the econ- omy is going? Mr. POWELL. It is certainly an important indicator. Mr. NORMAN. Because it affects so many different facets of the economy. Mr. POWELL. Sorry? Mr. NORMAN. Because it affects so many facets of the economy, is that right? Mr. POWELL. I’m sorry. I am having a hard time hearing you. Mr. NORMAN. Because it affects so many facets of the economy. In other words, when you are housing, whether it is commercial, residential, you buy a lot of products that are across the spectrum. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 34 Mr. POWELL. It is a very important sector of the economy for the reasons you point out. Mr. NORMAN. And one of the reasons that most economists are predicting a severe recession is housing as a leading economic indi- cator. I have done that. That is where I have made my living. Do you realize it is very simple to solve, to get the housing to a point that it was under the previous Administration? I am from South Carolina. People move there. You realize in the last probably 4 months, there has been a severe cutback, despite the fact that peo- ple are coming in and need it, and it is because of this Administra- tion’s war on energy and natural gas. The Fed can’t regulate that. Putin can’t regulate that. It is a direct result of policies of this Ad- ministration, and one of the reasons that it is basically going to come to a standstill, the war on energy, and you can’t afford gas for your product. So, the war on the workforce this Administration has waged, when you pay people not to work, it is kind of a dis- incentive to go to work. Supply chain has been mentioned, and the call I got 4 days ago from a leading producer of chicken who cannot get corn to feed the young chickens is kind of a problem. Interest rates, which are at your disposal, are going to severely affect the housing industry. When you are paying a 6-percent long-term mortgage rate along with every other cost increase directly caused by the policies of this Administration, the housing is going to come to a stopping point, as it is now likely to have. Regulations have been mentioned to you. We now face on simple projects a regulation, and I would point out many of them needless, to be 35 percent, 38 percent. That is, when you combine all of these things, housing is going to take a tremendous drop. That will affect the economy. What do you say? Mr. POWELL. I think all of those things are affecting the econ- omy. Mr. NORMAN. Is greed, which has been mentioned here, a leading cause of inflation? Mr. POWELL. I think it is a macroeconomic phenomenon that is caused by the things we have been talking about. Mr. NORMAN. Was greed not a factor 4 years ago? Mr. POWELL. No. Mr. NORMAN. Maybe, it is a factor now. Were they just less greedy in 2016 through 2020? Mr. POWELL. It is hard to see why they would have been. Mr. NORMAN. Okay. And was Putin responsible for the low gas prices that we experienced from 2016 to 2020? Mr. POWELL. Not as far as I know. Mr. NORMAN. I don’t think he had much impact. If he did, it would be a sad state for the United States. I think one of the Mem- bers mentioned the debt relief for college students that has been proposed by the current Administration. How will that have an ef- fect on the economy? And I think the number that has been talked about, to forgive $50,000 per student, will that affect the inflation in the economy? Mr. POWELL. As I mentioned, we don’t score these bills from an inflation standpoint. Mr. NORMAN. It wouldn’t be positive though, would it? Mr. POWELL. Sorry? VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 35 Mr. NORMAN. I doubt it would be positive, would it? Mr. POWELL. I don’t know. That is for elected folks. Mr. NORMAN. And on the central bank digital currency, would you have to have approval from Congress before the Federal Re- serve got involved? Mr. POWELL. I can’t imagine that we would move forward with- out authorizing legislation. Mr. NORMAN. So, you would have to have the approval of Con- gress? Mr. POWELL. Yes. Mr. NORMAN. Thank you for what you are doing. You are using the tools that you have at your disposal. Most of this could be eliminated if we had a policy now that was pro-business, and pro- growth. But thanks for what you are doing, and congratulations on being reappointed as Chair. Mr. POWELL. Thank you. Chairwoman WATERS. Thank you. The gentleman from Cali- fornia, Mr. Vargas, is now recognized for 5 minutes. Mr. VARGAS. Thank you very much, Chairwoman Waters and Ranking Member McHenry. And Chairman Powell, thank you very much for being here, and congratulations, I think—I am not sure. You are running into a pretty heavy lift here going forward, but I very much appreciate you being here today. I believe that inflation is real, obviously, and it is hurting a lot of people. It is the causes, I think, that are being manipulated, and, frankly, lied about. And there is one big criticism that I make of you, and also especially, I guess, Secretary Yellen, which is that you haven’t explained inflation within the context of the world en- vironment, what is happening globally. My good friends on the other side of the aisle love to blame infla- tion singularly on President Biden and his policies. I didn’t get a chance to ask Secretary Yellen any questions when she was here last time; I’m kind of low on the totem pole here. But I wanted to scream, because every time, she led with her chin, as opposed to explaining that this inflation is global, and now that I have you here, I get to ask you some questions. What is the inflation rate in the European Union, overall? Mr. POWELL. I wouldn’t— Mr. VARGAS. It is 8.8 percent according to Statista. Did they re- ceive any money from the American Rescue Plan? Mr. POWELL. Not to my knowledge. Mr. VARGAS. What is the inflation rate in Estonia? Mr. POWELL. In Estonia, I don’t know. They are roughly com- parable to ours. Mr. VARGAS. It is 20.1 percent. It is not very comparable to ours. It is over 3 times higher than ours. Mr. POWELL. I think the European democracy is similar to us. Mr. VARGAS. Estonia. Did they receive any money from the American Rescue Plan? Mr. POWELL. Not to my knowledge. Mr. VARGAS. How about Latvia? What is the inflation rate in Latvia? Mr. POWELL. I have no idea. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 36 Mr. VARGAS. It is 16.8 percent. Did they receive any money from Biden or the American Rescue Plan? Mr. POWELL. Not as far as I know. Mr. VARGAS. How about Bulgaria? 13.4 percent. Mr. POWELL. I knew that one. Mr. VARGAS. Poland. What, you knew that one? Mr. POWELL. Yes. Mr. VARGAS. I apologize. I will let you try with Poland. How about that? They are a friendly nation, 12.8 percent. Did they re- ceive any money from the American Rescue Plan? And if they didn’t, why do they have inflation that is so high? Mr. POWELL. Not as far as I know. Mr. VARGAS. Why is their inflation rate so high? Mr. POWELL. In Europe, the inflation that they are seeing is principally due, I believe, to energy prices and food prices. It is due to the war, and it is due to the situation with Russia being their principal energy supplier. Mr. VARGAS. They didn’t receive any money, though, from the American Rescue Plan? Mr. POWELL. Not as far as I know. Mr. VARGAS. Okay. Let’s keep going. Romania 12.4, Slovakia 11.8, Hungary 10.8, Croatia 10.7, Greece 10.5, the Netherlands— come on, you have to know the Netherlands. Mr. POWELL. Since we are going down, it would be lower. Mr. VARGAS. 10.2 percent. Mr. POWELL. See? Mr. VARGAS. But you do see that, I am glad, at this point. Let’s skip to Germany. They are very similar to us. Mr. POWELL. I am not going to guess. Mr. VARGAS. 8.7 percent. And the reason I wanted to go through the litany of these things is that I keep hearing from my good friends on the other side of the aisle that inflation somehow magi- cally exists because of Biden’s policies, because of the American Rescue Plan. Well, if that is true, then there shouldn’t be this other inflation in other countries. It is a global phenomenon. As Clinton used to say, ‘‘It is the economy stupid.’’ Here, it is the pandemic, obviously, and things that happened. We have a situation around the whole world, yet you don’t ex- plain it globally. And I shouldn’t, because I really like you a lot, and I really do think you are doing a good job, trying very hard, but I did want to yell at Secretary Yellen because she didn’t ex- plain anything globally. Don’t you think you have a responsibility to the American people? I know in my district, most people believe that inflation is only happening here, because of the rhetoric that they hear from the other side. And you guys, I think, have the op- portunity and the responsibility to give them the full picture, not this limited picture, and I hope you do so. With that, I yield back. Thank you very much, Madam Chair- woman. Ms. GARCIA OF TEXAS. [presiding]. The gentleman yields back. The gentleman from Oklahoma, Mr. Lucas, is now recognized for 5 minutes. Mr. LUCAS. Thank you, Madam Chairwoman, and actually, I think my timing for my question is perfect. Chairman Powell, I VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 37 would like to discuss with you today an issue that is of significant concern to me and many of my colleagues. The SEC’s regulatory agenda has more than 50 significant proposals that are currently underway or approaching a final vote. These rules cut across every asset class under the the Securities and Exchange Commission’s (SEC’s) jurisdiction. The sheer complexity and volume of these overlapping rulemakings could negatively impact markets and the public that depends on them. SEC Commissioner Hester Peirce warned that the speed and character of these rulemakings could create dangerous conditions in our capital markets. Now, this is against the backdrop of the U.S. economy facing significant challenges. We have discussed that all morning: inflation at more than a 40-year high with substantial increases in the cost of food, housing, and gas prices, record prices. Also, supply chain backlogs and labor shortages continue to weigh on the economy with consumer and business confidence plum- meting. And, of course, we are still studying the impact of the glob- al pandemic and the consequences of the ongoing Russian invasion of the Ukraine. In Oklahoma, small businesses, farmers, and ranchers are navi- gating through surging energy prices and volatile agricultural mar- kets for inputs like grain and fertilizer. Poor crop conditions and high commodity prices are expected to worsen the situation throughout the summer and into the rest of the year. In uncertain times like this, market participants need to seek to protect their retirement savings, to hedge risk, and to safeguard their livelihoods. A top priority should be supporting liquid mar- kets to protect the U.S. economy from the face of the substantial headwinds. I know you don’t comment on other entities within the Federal Government, and I know these regulations that are going to have such a tremendous impact are not coming from your area. But unfortunately, I am concerned that the magnitude and the sig- nificance of rulemaking proposals coming out of the SEC in such a short amount of time runs counter to the goal. We know that reg- ulatory uncertainty creates an adverse market environment for eco- nomic growth and market stability. Chairman Powell, I will not ask you to comment on the SEC, but could you speak to the importance of market liquidity during peri- ods of economic uncertainty? Mr. POWELL. Yes. One of the things they do is process informa- tion and consider the implications of it, and it is critical that mar- kets be liquid enough to do that. And if that happens, then finan- cial conditions can adjust, and equity prices of various kinds can adjust. And one of their big functions is to do that and to absorb news, sometimes very difficult news, in a way that preserves sta- bility. Mr. LUCAS. I think Congress and the public should have the op- portunity to fully grasp the impact of the SEC’s sweeping pro- posals. If we really want to tame inflation, we should begin by not making the current situation worse. The SEC’s approach will rattle markets during a time when strong capital markets are essential to our economic growth and our constituents back home. After all, you are working hard on the demand side of the equation. But we in Congress and the Administration should help with the supply VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 38 side of the equation by not making it more difficult to invest in and create more goods and services in this country. That said, Chairman Powell, as you have acknowledged, the Fed’s monetary policy tools can do very little to mitigate rising gas prices. However, the increased cost of gas has an oversized impact on consumer inflation expectations. Folks see the price at the pump going up and experience the price-per-gallon at an all-time high. Could you discuss how the Fed envisions its ability to rein in infla- tion expectations driven in large part by gas prices, or to put it an- other way, if gas prices remain at record levels, is an aggressive response from the Fed all but guaranteed? Mr. POWELL. If gas prices remain at the current levels they are at, it means inflation continuing to go up. So, it isn’t so much the level as the rate of change, as you know. I think we are mindful that even though these things are outside of our control, the gas prices and food prices for the most part, that adds a little bit of ur- gency in our wanting to get our rates into a place where we are addressing inflation directly because the public reacts to all kinds of inflation, not just core inflation. Our tools tend to generally go to core inflation, and we don’t think we can use our tools to change energy prices, but we do think that they add to our desire to get expeditiously to the appropriate levels. Mr. LUCAS. And clearly, Congress and the Administration, and the Majority has a responsibility to increase supplies of resources, not discourage that. I yield back, Madam Chairwoman. Thank you, Mr. Chairman. Ms. GARCIA OF TEXAS. The gentleman’s time has expired. The gentlewoman from Ohio, Mrs. Beatty, who is also the Chair of our Subcommittee on Diversity and Inclusion, is now recognized for 5 minutes. Mrs. BEATTY. Thank you so much, Madam Chairwoman, and thank you, Chair Powell, for being here as you are navigating through all of these Federal issues during this difficult economic time. Chair Powell, after our hearing concludes, this committee will be voting on a few pieces of legislation, so I am going to take advan- tage of having you here to shed some light on a few of the things that we will be considering. I can’t think of a better person to give us some insight on these issues. The first question is, we will be voting on an amendment that would delay the SEC’s small business advocate from conducting outreach to underserved business owners until after gas prices drop to the pre-COVID level. Chair Powell, in your opinion, will delaying the SEC’s outreach to minority business owners affect gas prices in any way? Mr. POWELL. With all respect, I am reluctant to comment on pro- posed legislation. Mrs. BEATTY. Let me ask you this. Let’s say if it is not legisla- tion, is there a correlation between what gas prices would be in re- lation to what they were pre-COVID with inflation? Mr. POWELL. Again, I would be expressing an opinion on some- one’s amendment. If I start down that road, I don’t know where it stops. These are matters for elected people. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 39 Mrs. BEATTY. Would you say that the global markets and infla- tion across the country, that we are seeing this everywhere? Mr. POWELL. Yes, inflation is happening everywhere now. Mrs. BEATTY. I am dealing with a lot of fair housing issues in my district, and I have a long history of working with public hous- ing and relocating people. And as we look at issues with housing, do you think housing is any way tied to inflation? Mr. POWELL. I’m sorry. I didn’t catch the question. I apologize. Mrs. BEATTY. Do you think what is happening in our housing market is tied to inflation in any way? Mr. POWELL. Yes. Yes, it is. Housing costs are about a third of the CPI. We call them housing services. The way it works is, in ef- fect, an owner of a house is charging something called owner’s equivalent rent or paying something called owner’s equivalent rent. So yes, it is an important factor in inflation. Mrs. BEATTY. Okay. Can you tell us, in your opinion, in light of Congressman Vargas’ question, as he was giving us an idea of how some of our colleagues are trying to tie things to the American Res- cue Plan, they are trying to tie it to us taking care of the least of us. If it is tied to inflation, why in other areas or countries, and they don’t have the American Rescue Plan, and how do you answer more about Mr. Vargas’ question? I know he gave you a litany. I am not trying to put you on the spot with quizzing you on what their inflation rate is in comparison to ours, but I think you got where he was going with this. Is there anything else you would like to elaborate on in relationship to where he was going? Mr. POWELL. Sure. I will just say that even though we have a very similar inflation rate as a lot of the large European democ- racies now, pretty close, there are differences between countries. And the difference with the U.S. compared to the European coun- tries is that ours is more about demand. We have areas in our economy where demand is substantially in excess of supply. It is not mainly a feature of the European economies where they are really feeling very, very high inflation because of energy prices and also food prices now. That is part of our story, too. We are also feel- ing energy and food prices, but we have this other part that is more core inflation, which is more susceptible to being managed by our tools and is really the object of our tools. Mrs. BEATTY. My time is already up. But in light of your re- sponse to my first question, I just need to say for the record, I can’t conceive of a single connection between gas prices set by global markets and giving advice to small businesses. At the same time, I have a hard time coming up with a theory of how allowing dis- criminatory housing will help stem inflation. and I think my time is up, so I yield back. Ms. GARCIA OF TEXAS. The gentlewoman’s time has expired. The gentleman from Texas, Mr. Sessions, is now recognized for 5 minutes. Mr. SESSIONS. Thank you very much, Madam Chairwoman. Chairman Powell, thank you very much for taking the time to be with us today. This is important to the American people who hear our questions. This is important for us as we weigh, and measure, and gauge your input, which we believe is exceptional. I have stat- VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 40 ed to you in the past that I believe that we need to have confidence in what you are doing. Today, I would like to, if I can, without dissecting your thinking, use some of the words that you have provided for us today to see your thinking. You had stated that as it relates to the Fed, ‘‘We don’t give advice to agencies.’’ Now, this is a quote from you today, ‘‘We don’t give advice to agencies.’’ Do you think that advice is dif- ferent, which I do, than the tools which you have to do your job? But I consider part of what you do best, perhaps the Fed, is advice. Can you help me to understand, ‘‘We don’t give advice to agencies?’’ Mr. POWELL. Particularly on fiscal matters, fiscal matters affect people’s lives. It affects industries, and people, and tax levels, and spending. That, in our system, is the province of elected people, and for someone who is an appointed person, who hasn’t stood for election, and has a very narrow mandate, I just think that is not appropriate. If we are going to wander into those kinds of things, then what would be the case for our independence? If we are going to be involved in every political issue that isn’t directly connected to our work, then why would we be independent? We should just be another agency, but we have this independence, and I think to preserve it, we need to stick to what we do and resist the tempta- tion to work on every problem, even the ones that are not assigned to us. Mr. SESSIONS. Let me thank you for the answer. You do know, however, as we were talking about student loans, it is a rather large amount, about $1.2 trillion that is out there, and you stated that you believe that would likely be dealt with in legislation. Now, that is what you said, likely to be dealt with in legislation, student debt. I think even private advice, not within your tool structure, but this advice that we are trying to land on would be really impor- tant because it will be, the way I see it, the next large hit to infla- tion. And this is why Republicans, or at least this Republican, says that I believe that this Administration, and the Democratic Party, are making friends with inflation. They are using the toolbox that they have of politics and money and spending policies to make friends with inflation. My point would be to you, I sure hope that someone could send a memo to someone saying that, if you have an opinion on that. Next point: We have had some discussions about unemployment. How is unemployment calculated? Mr. POWELL. You have to be actively looking for work within the last month and not have a job to be considered unemployed. If you are not looking, then you are out of the labor force, so you are not participating in the labor force. Those are the factors. Mr. SESSIONS. What we want to do—some members of this com- mittee have wanted to look back and to say, well, perhaps under President Trump, it was 3.5 percent, now we are 3.6 percent, so not a big difference, and yet the huge number of jobs that are available is really the factor. When there were no jobs, that is a problem, but to simply say, well, Trump was 3.5, now we are 3.6, everything is fair. It is all done. I think the other advice I would love to have from the Fed is about getting people back to work, because today, the government has given zero instructions for Federal workers to return to work. And I think that it is causing a mindset among VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 41 many that we don’t need to go to work, thus reflected in 3.6 per- cent unemployment and millions of available jobs. Mr. Chairman, thank you for taking the time to be here. It is my hope that you would find in your toolkit advice that becomes per- haps more important than that. Thank you, sir. Mr. POWELL. Thank you. Ms. GARCIA OF TEXAS. The gentleman’s time has expired. The gentleman from Florida, Mr. Lawson, is now recognized for 5 minutes. Mr. LAWSON. Thank you. I want to thank Mr. Powell and wel- come him back to the committee. Mr. Powell, I think earlier, there might have been something that came from one of my colleagues, and it was a rising interest rate to combat inflation does come with a rising unemployment rate and [inaudible] contributing to economic recession. While White unemployment rates have dropped to pre-pandemic levels of 3 percent and QI on 2022, the national Black unemployment rate remains still at 6.5 percent. And I know some things you can’t say, but what suggestion can you offer to help prevent Black and other minority communities from facing future economic inequities as the Federal Reserve considers continuing to raise rates in the near fu- ture? Mr. POWELL. If I heard your question correctly, it was whether we are considering additional future interest rate increases, sir? Mr. LAWSON. That is correct. Mr. POWELL. Yes. I think just last week, my colleagues and I wrote down our forecast for this year, and we anticipate ongoing rate increases over the course of this year. Yes, additional rate in- creases. Mr. LAWSON. Mr. Powell, do you believe that the Fed’s current inflation projection for 2022 and 2023 remains a good benchmark to consider, even with these vulnerability potentials growing in the upcoming months? Mr. POWELL. I think that the latest projections that individual FOMC participants submitted were submitted last Wednesday, so I think they are still fresh. And there is a range of expectations of people on the committee, but I think they are a reasonable set of projections, yes. Mr. LAWSON. Okay. Mr. Powell, several of my colleagues on the other side of the aisle, in debating about the Biden policy and so forth, which I know you can’t comment on, but there is a concern where we were kind of caught off guard with the war in Ukraine, and then, at the same time, our vulnerability of all of the things that we depend on for other countries. In your deliberation, when you all are working with the situation that has arrived that came from the Russia-Ukraine war, and other real estate, and other stress in China spilling over into the United State, does the Fed give a recommendation back to the Administration on how we should proceed in the future, because we have done a lot of things with other countries and we depend on a lot of countries for re- sources and so forth, and it looks like we are becoming very, very vulnerable—well, it doesn’t just look like it; we are becoming very vulnerable to this dependence. Do you all make a recommendation VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 42 back to the Administration on how we should proceed in the fu- ture? Mr. POWELL. No. No, sir, we do not. Mr. LAWSON. Okay. Early on, you said it is paramount that pol- icy position should be considered by the legislature or the Adminis- tration. Am I correct? Mr. POWELL. I’m sorry. I lost track of what you said there. I apologize. Mr. LAWSON. I think you stated to some of my colleagues that those policies should be left up to the Congress or to the Adminis- tration. You all don’t really deal with that aspect of it. Am I cor- rect? Mr. POWELL. Which aspect of it? Mr. LAWSON. About what recommendations could be made for all of these things that we have all showed that we depend on from other countries. And I might not be really clear, but for example, the gas situation with Russia, and things with Ukraine. Mr. POWELL. No, we are not in those discussions. Those are real- ly discussions that happen inside the Administration: the Treasury Department; the White House; and the other agencies. Mr. LAWSON. Okay. With that, Madam Chairwoman, I yield back. Ms. GARCIA OF TEXAS. The gentleman yields back. The gentleman from Missouri, Mr. Luetkemeyer, is now recog- nized for 5 minutes. Mr. LUETKEMEYER. Thank you, Madam Chairwoman, and wel- come, Chairman Powell. It has been a long morning for you, and afternoon. I have a question for you with regards to a quote that on March 17th, the Consumer Financial Protection Bureau (CFPB) put out in a blog on rising interest rates, in which they said, ‘‘The CFPB is the arm of the Federal Reserve System that is fully focused on con- sumers, ensuring that markets are fair, transparent, and competi- tive.’’ Do you believe that the CFPB is an arm of the Federal Re- serve, and do you have any control over their actions? Mr. POWELL. They are an independent agency. We have no con- trol whatsoever over their actions. They are actually legally a bu- reau. The law makes them a bureau. And our profits that we make off of our balance sheet, we give all of them to the Treasury De- partment, except the part that we give to pay for the CFPB. Mr. LUETKEMEYER. Does that make them an arm of the Fed? Mr. POWELL. For all practical purposes, they are fully inde- pendent in all of their— Mr. LUETKEMEYER. They are not an arm of the Federal Reserve then. I wouldn’t consider that an arm. They have a relationship, but they are not an arm. Mr. POWELL. Technically, they are a bureau, but— Mr. LUETKEMEYER. They are not under you, so— Mr. POWELL. No. Mr. LUETKEMEYER. —how they can be an arm? Mr. POWELL. Yes, we have no supervision of them. We collabo- rate with them, we coordinate with them, we talk to them. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 43 Mr. LUETKEMEYER. This is an overreach by the Director. I just want to make sure that everybody is on the same page. This is a bunch of nonsense and needs to be put in its place. Chairman Powell, you have your hands full right now. And in this Wall Street Journal article from Tuesday, the economists say that recessions are likely down here, which said, ‘‘Stocks are not bottoming very soon.’’ So, we have some concerns. I know yester- day, you were in the Senate, and there was a lengthy discussion on inflation, which there has been here this morning as well. In my mind, there are four root causes of inflation, and we had econo- mists in your chair a few weeks ago, and I had one in my Small Business Committee a couple of weeks before that, and I asked the same question. And I said, it looks to me like there are four causes of inflation—monetary supply, rules and regulations, energy and supply chain, and job problems that we have with workers in the economy today—and they agreed that is basically your four prob- lems that are underpinning inflation. I asked them to give me a percentage of each one of them. They said roughly 40 percent for money supply, 20–20–20. I guess my concern is that if you look at those four causes, you are trying to help fight inflation, which is one of your mandates, and you are really under money supply as the only thing you have any ability to do something with. And even then, it is probably only half of it, because Congress has control over how many dollars are put into the system with additional bills, like the trillion-dollar stimulus package last year, taxes, and things like that. So, it looks like you have a minimal amount of impact on those four things. It looks to me, quite oftentimes, that whenever you are trying to control the inflationary stuff with the interest rate, it is kind of over here trying to do a little, and something went over there. There is all sorts of stuff going on, and the Administration seems to be at a contradiction to some of the things you are trying to ac- complish over here. Do you ever feel like that? Do you believe that is maybe a position that you are in right now? Mr. POWELL. We are very focused on the part of the job that we can do and using our tools to do it. Mr. LUETKEMEYER. I understand that, Mr. Chairman. It would seem all of these other factors fall outside your purview here. And for you to try and manipulate it and everybody rely on you to solve the inflation problem by tinkering with the interest rate over here, it looks like that is a little overhyping the situation. But one of the things that is very concerning is the regulatory cost. In my discussion with an economist, he said, look, this is the Ad- ministration’s own figures, last year administration cost of compli- ance with new regulations was $201 billion. That is astronomical. That is a huge cost that has to be built into all of the small busi- nesses and other businesses whenever they produce products and services for sale to customers. They have to build an additional $200 billion in costs every year. Would you agree that is a huge driver of inflation? Mr. POWELL. It sounds like a big number, yes, and as you know, we try at the Fed to weigh costs and benefits and take that into consideration. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 44 Mr. LUETKEMEYER. Would you agree that those are the four things that I said are underpinning inflation? Would you agree that those probably are the four major problems? Mr. POWELL. Yes. Overwhelmingly, most economists would not think of it in terms of money supply, but would think of it in terms of supply and demand. And although there may be a role for money supply, they would think in terms of supply and demand being out of balance, and that is how I think about it. Mr. LUETKEMEYER. The definition of inflation I have always heard was too many chasing too few goods and services. If you throw more money in, you have more money to supply— Mr. POWELL. There are 40-plus years of history, and actually, Milton Friedman, at the end, came back and said, that is not really working anymore. Mr. LUETKEMEYER. Mr. Chairman, I just have one more— Mr. POWELL. Maybe working again, though, is the— Mr. LUETKEMEYER. —quick comment for you with regards to this. It looks to me like whenever you are modeling— Ms. GARCIA OF TEXAS. The gentleman’s time has expired. Mr. LUETKEMEYER. —when you are trying to model and you use it for— Ms. GARCIA OF TEXAS. The gentleman’s time has expired. Mr. LUETKEMEYER. —different things, I hope that your models are including these things— Ms. GARCIA OF TEXAS. The gentleman’s time has expired. Mr. LUETKEMEYER. —in your modeling. I would appreciate just 13 seconds to be able to finish my question. Ms. GARCIA OF TEXAS. The gentleman’s time has expired. Mr. LUETKEMEYER. Thank you, Madam Chairwoman. Ms. GARCIA OF TEXAS. Absolutely. Thank you. The gentleman from California, Mr. Sherman, who is also the Chair of our Sub- committee on Investor Protection, Entrepreneurship, and Capital Markets, is now recognized for 5 minutes. Mr. SHERMAN. Chairman Powell, I want to thank you for bring- ing to the attention of this committee over the last several years the systemic risk posed by tough legacy London Interbank Offered Rate (LIBOR), some $16 trillion of instruments where we would not know the interest rate that the debtor is supposed to pay the creditor, and $16 trillion is a big problem. We passed the relevant bill back in March, and for those who think Congress can’t possibly deal with a problem until after the last minute, we passed it a year-and-a-half before the LIBOR hit the fan. That bill requires rulemaking by the Fed, and the rulemaking is supposed to be done by mid-September. And that is the final step in making sure that these LIBOR instruments are not a subject of uncertainty, because even one basis point, the thousandth of a percentage point of risk or uncertainty turns out to be significant when you are dealing with $16 trillion. Chairman Powell, can we count on the Fed getting these regula- tions out by mid-September? Mr. POWELL. Yes. By the way, thank you for all of your efforts on this technical problem, which have really helped move it along. And in terms of the rule, yes, we know the deadline. We know it VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 45 is a tight deadline, and I am assured that people are working very hard to meet that deadline. Mr. SHERMAN. Thank you. You are shrinking your balance sheet, and there’s a lot of focus on how much you are shrinking your bal- ance sheet, but what also matters is the content of the balance sheet. You can invest in Treasuries, or you can invest in mortgage- backed securities. If you go to an all-Treasury portfolio and sell off your mortgage-backed securities, that will probably raise mortgage rates, and we are trying to deal with housing inflation and housing affordability. So, whether it is the mortgage on an apartment build- ing that might be built or whether it is a home mortgage, keeping mortgage rates low, I would think, would help inflation. Is there any possibility that you would take a look at that and perhaps keep in your portfolio some of your mortgage-backed secu- rities and perhaps have a mix of mortgage-backed securities and Treasuries on your balance sheet? Mr. POWELL. We are committed to having a mostly Treasury, not all, but mostly Treasury balance sheet, and we don’t have that now. And Treasuries are going to start to roll off mortgages much less. So, we have not decided to start selling mortgage-backed secu- rities, but we have said that we will look at that again when this process is further along. And if we do, I don’t actually think that the things we would do would have much of an effect on mortgage rates compared to the effects that we have already had. Mr. SHERMAN. We have obviously faced a recession risk. Presi- dent Biden says that a recession is not inevitable. Do you agree? Mr. POWELL. I don’t think that a recession is inevitable. Mr. SHERMAN. Thank you. There seems to be a great debate in this committee as to whether inflation is the result of COVID and the effects of the Ukraine war, which affects the entire globe, or whether they are the result of Biden and his policies, which, be- lieve it or not, are not applicable to Germany, Britain, or Canada as much as we in America like to think we are the entire world. And then, we look at inflation rates, and we see higher month-to- month inflation rates in Canada and Germany than here in the United States, higher year-on-year in Germany, and in the U.K. We are in a situation where only if you believe that Biden is re- sponsible for German inflation can you reach the conclusion that it is Biden’s policies that have caused inflation in the United States, which is pretty much on a par with what we see in other developed countries, particularly Europe. A part of this is the idea that if Biden just gives a speech saying we would like to see a fos- sil-free future, that somehow impairs the amount of oil that is pro- duced in the United States and somehow then affects worldwide oil prices. I ask unanimous to submit for the record an article from Forbes entitled, ‘‘U.S. Oil Companies Have Increased Drilling by 60 per- cent in One Year.’’ And without objection, I hope that could be done. Ms. GARCIA OF TEXAS. Without objection, it is so ordered Mr. SHERMAN. And I would point out that we had higher oil pro- duction in this country in the first year of Biden than in the last year of Trump. Then, we had higher oil production in 2022 than 2021, and in 2023 we will have the highest oil production in the VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 46 United States in our history. Unfortunately, that will probably not be the lowest gas prices in our history. So, whether it is good or bad, we have discovered that making speeches does not suppress oil production. Ms. GARCIA OF TEXAS. The gentleman’s time has expired. Mr. SHERMAN. I yield back. Ms. GARCIA OF TEXAS. The gentleman from Michigan, Mr. Huizenga, is now recognized for 5 minutes. Mr. HUIZENGA. Thank you, Madam Chairwoman, and it is just so ironic that my colleague is talking about oil and pumping. I lit- erally just left my office with a group of folks from Alberta. There is an alliance of six energy companies up there that are going to get, by the way, to net zero on their carbon emissions by 2050, but Canada supplies 62 percent of all of the oil that is imported here in the United States, or they did. But they can’t pump it here, or they can pump it, but they can’t pipe it here because the Keystone Pipeline, which was bought by the Canadian Government, was can- celled by this Administration. So, yes, we can blame the Biden Administration for some of this inflation. And yes, they are directly responsible for gas prices and what we are seeing here. You are trying to spread it around that it is Putin’s fault, that it is everybody else’s fault. Meanwhile, this President is flying to Saudi Arabia, and won’t go to Alberta, and won’t pick up the phone and talk to Justin Trudeau about getting Canadian North American oil here. That is security. Let’s not stop going to our adversaries and go to our allies. Okay. I need to take a breath here for a moment and, Mr. Pow- ell, I am glad you are here. And I do believe that you attempt to be less political than maybe some of your other predecessors. But I do want to briefly point out something that Mr. Steil and Mr. Timmons raised earlier regarding your comments in February 2021, as Congress was debating the Biden stimulus. Mr. Timmons cited those comments earlier. In fact, your quote is still highlighted on the website of the House Budget Committee, the Majority’s House Budget Committee, under the headline, ‘‘Experts and Lead- ers Agree the Country Needs the American Rescue Plan Now.’’ Your words are listed alongside quotes from the Minneapolis Re- serve Bank president, and the president of the Federal Reserve Bank of Atlanta, and, again, this is from 2021. And I just wanted the hearing record to reflect this timeline, first of all, and ask you, do you think that maybe your quote should be taken down from that website, knowing what we know today? Mr. POWELL. It is not up to me whether people take down the quote. Mr. HUIZENGA. Let me tell you, though, if you are trying to be apolitical, that and allowing those words to stand with this mess that has been created in the economy doesn’t stand. I guess that is up to you, but if you are going to strive for that, I would suggest at least have some of those folks sitting behind you—they might want to make a phone call. Okay. We discussed during your last visit that I have long advo- cated for a rules-based approach to monetary policy. We talked about the Taylor Rule. I have suggested the Yellen Rule. Now with your reappointment, it could become the Powell Rule. I don’t care VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 47 what it is called, but I am very concerned that we are not looking at those guideposts and having those guideposts. I am glad to see that in the Fed’s most recent report, you did once again include a section on monetary policy rules, which had been omitted from the previous version, and you and I had discussed that. I want to read a quote from the June report and then get your thoughts, ‘‘Although simple rules cannot capture complexities of monetary policy and many practical considerations, it makes it un- desirable for the FOMC to adhere strictly to the prescriptions of a specific rule. Some principles of good monetary policy can be illus- trated by these policy rules.’’ My question is, what principles do you believe are important when the FOMC is making decisions on monetary policy? Mr. POWELL. What principles are important? Mr. HUIZENGA. And we have a minute with the quick gavel. Mr. POWELL. I think, to try to think systematically about mone- tary policy and not be, fully discretionary, to try to have a frame of reference, what are we trying to do? The Taylor Rules, what they do is they embody the dual mandate. What you are looking at in the standard Taylor Rule and all of the spin-offs is, how far are you from your price stability mandate? How far are you from your em- ployment mandate? And that tells you it is a frame of reference, and I think that is a useful thing to have. Mr. HUIZENGA. Okay. I have 30 seconds left, and obviously, what I am trying to push for is more transparency from the Fed. I also want to very quickly revisit your interaction with Mr. Gottheimer, where you spoke about the importance of preserving innovation and competition in the digital asset marketplace, which I agree with 100 percent. In fact, Republicans on this committee included that as part of their working principles last year. Let’s talk about that light touch when it comes to legislation, however, one of my colleagues also noted that regulators right now are being very heavy-handed, which I am— Ms. GARCIA OF TEXAS. The gentleman’s time has expired. Mr. HUIZENGA. —about as well, and I will follow up with you in writing on that, but we need to be here on how heavy-handed the regulators are. Thank you. I yield back. Ms. GARCIA OF TEXAS. The gentleman from Illinois, Mr. Casten, is now recognized for 5 minutes. Mr. CASTEN. It’s nice to see you, Chair Powell. I want to just start by thanking you for your service over these last couple of years. I know you and I have talked before about how your rhet- oric, your language, making it clear to all of us and to the nation that we needed a balanced fiscal and monetary policy in response to the downturn, created the political space for us to do what we did. I don’t think we could have done that without your voice, and the fact that we had as not only as rapid a recovery, but as equi- table a recovery as we did was because we had that space. And I think history will show that we owe you more gratitude than we have given you, and I thank you for that. The fact that wages grew fastest for the bottom quintile did not happen but for that fiscal policy that complemented what you were doing. And yet we find ourselves today with people talking about the fear of a recession. And I would submit to you that the fear of a VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 48 recession is not because our economy is weak, but because our de- mocracy is weak. If we were to use our tool on this side of the dais to say, what should we do to address labor markets, we would re- form our immigration system. What should we do to reduce peo- ple’s exposure to high-price volatile fossil fuels? We would make massive investments in cleaner, cheaper energy. What should we do in response to housing supply constraints? We would invest in housing. I could go on and on. Everything on that list is deeply, deeply partisan because the markets are looking at the United States and saying, do people in this line of work, those 537 of us who have the privilege to hold federally-elected office, do we see human pain and suffering as a problem to be solved or as a frailty to be exploited for our political ends? They look at my colleagues, who 2 years ago thought it was hard- er to stand up to Vladimir Putin and support Ukraine, and say they are going to do the same thing again. They look at the talking points that all of you get every Monday which say, talk about Biden’s energy crisis, say, ‘‘border crisis.’’ I admire your obedience. Do you have an ounce of leadership in your bodies? And now, we are left here in this moment, and I am not going to ask you to opine on policies. I understand you can’t do that. But you were so eloquent 2 years ago in saying if we don’t balance fis- cal and monetary policies, we are going to be looking at a recovery that looks much more like the Great Depression or the 2008 reces- sion, where it was a long, slow recovery. What concerns do you have right now if the only tool we use to respond in this moment is monetary policy? Mr. POWELL. Honestly, as you can imagine, I am very focused on monetary policy. And the thing that I assume you are hearing about from your constituents at home is inflation, and that is our assignment. It is not that we control all of it. Mr. CASTEN. I guess, and I am sorry to interrupt, but we are. But when I talked to the CFO of a manufacturing company a month ago, he said, ‘‘My business school teacher taught me to do just-in-time inventory, and now I am trying to manage to just-in- case inventory, and that requires capital.’’ We talk to chip manu- facturers who are saying, ‘‘I need money to build, but I need a labor force to grow there, and I don’t know how to do that unless I have access to capital.’’ Raising rates is great at curtailing demand. It is also great at curtailing supply. What concerns do you have if all we do is raise rates? Mr. POWELL. You are right. There would be supply effects as well, for example, look at housing, if housing starts will slow down, and I get that. But ultimately, we have a job to do, which is to re- store price stability so that the economy can function well. It is really the bedrock of the economy, and it is most important for the people at the lower end of the spectrum who are now seeing their wages and savings eaten up by inflation. We need to do that. There are lots of other things that need to be done in the econ- omy and that aren’t the business of the Fed, but we have that job. And that really is our focus along with, of course, preserving a strong labor market, the two mandates are equal. In the current situation, the labor market is very strong. It is extremely strong: two vacancies for every unemployed person; 3.6 percent unemploy- VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 49 ment; and wages moving up. It really is a question of getting infla- tion under control, and that has to be our focus. Mr. CASTEN. I would just ask you to use your voice as eloquently as you have over the last 2 years. I am not asking you to tell us how to do our job, but the supply pieces matter. And when the market is baking in a recession, I cannot justify that logic if the only tools we use are the tools under your purview. Thank you. I yield back. Ms. GARCIA OF TEXAS. The gentleman yields back. The gen- tleman from Kentucky, Mr. Barr, is now recognized for 5 minutes. Mr. BARR. Mr. Chairman, I visited with farmers in Fleming County, Kentucky, last Friday. My constituent, Charlie Masters, asked me to emphasize the extreme pain he and other hardworking Americans are experiencing as a result of this inflation crisis, and specifically told me that he couldn’t afford the skyrocketing cost of diesel fuel for his tractor. He added that, ‘‘I don’t know how the government says the inflation rate is 8.6 percent, because for those of us in the real economy, it feels more like twice or three times that rate.’’ That is how painful this is, Mr. Chairman. I appreciate your hu- mility in acknowledging that both the Biden Administration and the Fed were wrong last year when they assessed inflation to be transitory. Clearly, the failure to more urgently tighten monetary policy was a serious mistake. So while far too late, I appreciate the current commitment to aggressive tightening, including the recent 75 basis point rate hike. But on behalf of Mr. Masters and my other constituents who are suffering with these price hikes, I en- courage the Fed to exercise fortitude in restoring price stability and staying focused even in the face of financial market volatility, stay- ing focused on fixing the supply/demand mismatch in our economy. I have a question about the demand side and one on the supply side. On the demand side, clearly within the influence of monetary policy, the Fed has stated that its inflation target rate is 2 percent. The inflation rate last month was 8.6 percent, and as my con- stituent pointed out, it feels even worse. Given the chasm between where we are and where we need to be, do you anticipate any effort within the FOMC to increase its inflation target to 3 or even 4 per- cent? And will you commit to resist any efforts to change the infla- tion target that would make it even more difficult to anchor infla- tion expectations? Mr. POWELL. No, that is just not something we would do. We were shooting for 2 percent. Mr. BARR. Great. And will the FOMC consider reversing the ad- justment to the inflation targeting framework that it made in around August of 2020, to get back to a target of 2 percent? Mr. POWELL. We will revisit that in a couple of years. I will say that is really not the story behind why inflation is so high right now. Mr. BARR. I acknowledge that, but given the work you all have to do, I would offer that as a consideration for the FOMC. What is the end point for your balance sheet reduction efforts? Mr. POWELL. It really is when the balance sheet is at a size that we can conduct monetary policy, roughly in the range of $2.5 tril- lion or $3 trillion smaller than it is now. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 50 Mr. BARR. Okay. And we were at $4 trillion. Now, we are at $9 trillion, or a little less than $9 trillion, so you are saying $2 trillion or $3 trillion? Mr. POWELL. No. Sorry to interrupt. Mr. BARR. Okay. Mr. POWELL. We look at it as a percent of GDP really, and so we are trying to get back to roughly the level of GDP we were at. Mr. BARR. I see. On the supply side, you testified earlier that supply chain issues and the price of oil are out of your control. I respectfully disagree in part, and certainly the Fed does not and should not implement fiscal or energy policy. But in light of the im- pending confirmation of Michael Barr as Vice Chairman of Super- vision, I am concerned that the Fed’s regulatory framework could exacerbate supply constraints, specifically, forcing banks to sideline capital that institutions could deploy to spur business investment, gold plating U.S. bank’s capital requirements seen recently with the Basel Committee’s modification to the G-SIB surcharge in the EU, which reduces our domestic competitiveness, and especially the climate finance agenda and climate stress testing that would redi- rect capital away from fossil energy precisely at the wrong time when we need more, not less, investment in fossil energy, and when a gallon of gas is $5 nationally and rising. Do you acknowledge the role of the Fed related to business in- vestment regulation as further potentially constraining supply? Mr. POWELL. We certainly do not want to be and are not in the business of allocating credit either to or away from any particular industry. We want those decisions to be made in the private sector. Mr. BARR. On the regulatory supervision side of the house, there is a supply side impact and excessive regulation, especially in the climate finance area, where we need more investment in energy, and that could have an impact on your inflation fight. Finally, a question about Fed independence. Last week, my Dem- ocrat colleagues passed a bill out of the House that would add to the Federal Reserve’s mandate by tasking the Board with the addi- tional responsibility of addressing racial and socioeconomic dispari- ties rather than remaining focused on price stability. My question is, when inflation hurts minority and low-income populations the most, do you believe giving the Fed new respon- sibilities that fall outside of its core competency would politicize the Fed and compromise your independence precisely when you should be focused on combating inflation? Ms. GARCIA OF TEXAS. The gentleman’s time has expired. Mr. BARR. We would love an answer to that question, Madam Chairwoman. Ms. GARCIA OF TEXAS. I think Mr. Powell can submit that in writing and forward it to you. Mr. POWELL. Then, I will just say, I think the public— Ms. GARCIA OF TEXAS. Just very quickly then, because we have people waiting, and you have a hard stop at 1:00. Mr. POWELL. I was just going to say that the public has been well-served by the dual mandate, and I would be concerned with any statutory requirement that sets us up to be accountable for achieving things that we can’t achieve with our tools. And I do think that is a concern. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 51 Ms. GARCIA OF TEXAS. Thank you. Mr. BARR. Thank you. I yield back. Ms. GARCIA OF TEXAS. The gentleman from New York, Mr. Torres, is now recognized for 5 minutes. Mr. TORRES. Thank you, Madam Chairwoman, and thank you, Chair Powell. As you know, one of the dominant drivers of inflation is housing. The affordability crisis is one of supply and demand. The demand for affordable housing far exceeds the supply. Do you believe, as I do, that public investments in an expanding housing supply would bring us closer to addressing the housing afford- ability and housing inflation crisis? Mr. POWELL. I would agree that housing is in short supply, and there is an issue there, but the question of how to address that is one for you. Mr. TORRES. Okay. But if public investment had the effect of ex- panding the housing supply, that would have an impact on reduc- ing inflation in the long run. Is that a fair assessment? Mr. POWELL. Again, I am reluctant to be drawn into sup- porting— Mr. TORRES. Just an objective description of the impact; I am not asking for you to express support. Mr. POWELL. More supply generally means that— Mr. TORRES. Lower prices, right? Mr. POWELL. —prices will be lower. Mr. TORRES. Okay. Even if you raise interest rates, prices might nonetheless remain high because of supply chain disruptions. Cata- strophic climate change will over time open a Pandora’s box of sup- ply chain disruptions. Is it fair to say that catastrophic climate change, if left unchecked, will likely lead to more inflation and not less and will likely render the Fed less effective at reducing infla- tion? Mr. POWELL. Would climate change do that? Mr. TORRES. Yes. Mr. POWELL. Over a very long period of time, I think it would be very hard to say, and it will depend on what is the govern- mental response. It will depend on what is the private sector re- sponse. It certainly has the potential. I think some people think that dealing with climate change will put upward pressure on in- flation, though. Mr. TORRES. But in the long run, if climate change disrupts the supply chain, that will obviously lead to higher inflation, and that is the kind of inflation that the Fed would have the most trouble reducing. Is that fair to say? Mr. POWELL. Yes, but, again, we are not climate policymakers. We don’t have to weigh these decisions that you do. It is really a question for elected officials. Mr. TORRES. Regarding the President, how much higher could the interest rate go? What does the worst-case scenario look like? Mr. POWELL. How much higher could the interest rate go? Mr. TORRES. Yes. Mr. POWELL. No higher than it needs to go, but we think— Mr. TORRES. But what is the worst-case scenario? Mr. POWELL. I wouldn’t say worst case, but I will tell you what I think. First of all, financial conditions have tightened very broad- VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 52 ly, but the Federal Funds Rate, our own policy rate, is still quite low, so we want to get it up to neutral pretty quickly. And then after that, we think it needs to be in a place where it is moderately restrictive, meaning above the neutral rate, and that is only appro- priate because we have inflation at a 4-decade high. My colleagues and I wrote down sort of a range of 3 to 3.5 percent by the end of this year, and then maybe 3.5 to 4 percent, and that is all highly conditional based on many, many assumptions. I think we will do what makes sense as we go, but those are rough estimates, I think, of what we think might turn out to be appropriate. Mr. TORRES. And then, if the Fed has a target of 2 percent, how long will it take you to reach the target? Mr. POWELL. In forecasts, I would say generally, my colleagues and I expect that inflation will move down over the course of the next 2 years, much closer to the target. Mr. TORRES. My understanding is that one of your projections is that headline and core inflation will subside in 2023 to 2.6 and 2.7 percent, respectively. Is there any historical precedent for reducing inflation as rapidly as the Fed is projecting? Mr. POWELL. Well, yes. Unfortunately, Paul Volcker had to do something very much like this, on a much larger scale. And, yes, core PCE inflation has actually tracked down a little bit from the very hot levels of late last year and is closer to 4 percent. So, I think it is plausible that using our tools and ideally the supply side healing, that we could get inflation down to those levels next year. Mr. TORRES. As I understand that, there are two models of CBDCs, intermediated and disintermediated. The Fed can either operate through the commercial banking system or it can enable consumers to have direct accounts with the Fed. Which approach are you inclined to favor? Mr. POWELL. Intermediated. Mr. TORRES. Intermediated. Mr. POWELL. We actually don’t have legal authority to provide accounts to anyone but depository. Mr. TORRES. The Fed has said it does not intend to proceed with the issuance of a CBDC without clear support from the Executive Branch and Congress. Do you see congressional authorization as a policy preference or as a precondition for creating a CBDC? Mr. POWELL. I think we will need to have an authorizing law, and I think we haven’t decided whether we think this is in the public’s interest. If we do, we will come to you. Mr. TORRES. But as a matter of law, is that a policy preference? What is your view? Mr. POWELL. It is a matter of law. Mr. TORRES. As a matter of law. Mr. POWELL. Yes. Mr. TORRES. I see my time has expired, so I yield back. Ms. GARCIA OF TEXAS. The gentleman from Arkansas, Mr. Hill, is now recognized for 5 minutes. Mr. HILL. Thank you, Madam Chairwoman. Mr. Chairman, thank you for being on the Hill this week. We greatly appreciate it, and I wanted to change subjects. You have had a lot of good interaction today, and I wanted to talk a little bit about a rising interest rate environment and the impact on the Fed itself. VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 53 The New York Fed released projections for the Fed’s balance sheet as a part of its annual overview of its 2021 open market ac- tivities. And they announced to the public that the Fed portfolio could run a projected loss of about $300 billion through 2024 as in- terest rates continue to rise, since you have an enormous Vegas in the world, I guess, fixed income portfolio. The Fed’s most recent fi- nancial statements for the first quarter show an unrealized capital loss of $450 billion during the quarter. My first question is, does the Fed need a positive capital cushion in order to carry out its mission as our central bank? Mr. POWELL. No, we don’t. Mr. HILL. Can you explain to people, why not? Mr. POWELL. Sure. What we do is, our liabilities—our currency, for example, is a liability to us, and we don’t pay any interest on it, but we own the countrary asset, which is Treasury bills, so we actually have substantial earnings. And we give those to the Treas- ury Department by law over the course of the year, and we have given a trillion dollars’ worth of those earnings to the Treasury De- partment over the years, so we don’t retain it as capital because we don’t need it. It is literally not required for us to conduct the operations and do monetary policy. We don’t. We have a very thin sliver of capital, but it is sort of symbolic. We are not a private in- stitution. Mr. HILL. So as interest rates increase and you have to pay out interest on reserves, and you have about $9 billion, I think, of oper- ating expenses, there is a point in this interest rate increase where potentially you would be at an operating loss, I would take it, and that you would not be having a profit to distribute to the Treasury. Is that possible? Mr. POWELL. Yes, that can happen, but, again, it will have no ef- fect whatsoever on our ability to conduct policy, and it is not some- thing we would consider in setting policy. Mr. HILL. Right, and you just would treat that as a deferred asset. Is that right? This is money you owe back to the Treasury when you start making a profit. You would write that deferred asset off, right? Mr. POWELL. Exactly right, and we will pay it back down to zero. Mr. HILL. Since the Congress has imposed on the Fed an obliga- tion to pay for the Consumer Financial Protection Bureau, all their operating expenses, they just send you a memo and ask you to pay for that when you don’t have cash, is that added into that deferred account assets? Mr. POWELL. Yes, as a practical matter, it would be. It would be very small. Mr. HILL. It is not small compared to your overall operation, but it is one of those errors that I think Congress made honestly by im- posing on our independent central bank an obligation to, in theory, fund budget operations. In retrospect, over the last 10 years, do you agree philosophically, that ideally, the Fed earnings wouldn’t be earmarked for a particular budget operation? Mr. POWELL. In a perfect world, we would fund agencies through different means. Many of them are self-funding. They get funding. Mr. HILL. Yes, I agree with you. I think it ought to be on appro- priations. I have always felt that way. I think it puts the Fed in VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 54 an unusual position here as rates rise and your earnings may go negative as you pay out more earnings than you obtain in unreal- ized losses. This just puts that in mind. Let me thank you. The last time we were together and you were before the committee, we noted in the review that the rules regard- ing potential monetary policy rules had not been included in the re- port to Congress, so thank you for putting those back in to the Con- gress. And I heard you talk to Senator Tillis yesterday about the importance of rules. Can you tell us again how you use rules like the Taylor Rule to help guide you in an interest rate policy? Mr. POWELL. They are just embedded in the work that we do, deeply embedded, and basically any time you make a forecast, you have to make an assumption about monetary policy. So, what you do is you use some form of a Taylor Rule, and there are many dif- ferent iterations at this point. But more fundamentally than that, we do try to be systematic in monetary policy and rules. You can consult rules and help. Mr. HILL. In the few seconds remaining, the Taylor Rule indi- cates, I think, that short-term rates might be in the range of 6 per- cent. You are not there yet, obviously, to fight inflation. How do you get there and over what period of time? Mr. POWELL. The real test is that financial conditions need to be in a place where they are causing the desired outcome in the econ- omy. There has been so much tightening that isn’t reflected in the overnight rate yet, so, really, we have done a whole lot more than the changes in the overnight. Mr. HILL. I thank the chairwoman, and I yield back. Chairwoman WATERS. Thank you. Thank you very much, and I thank the gentleman. The gentlewoman from North Carolina, Ms. Adams, is now recog- nized for 5 minutes. Ms. ADAMS. Thank you. Thank you, Madam Chairwoman, and Chair Powell. It’s good to see you again. I am happy that we can now congratulate you on your confirmation as you continue to serve as Chair. Also, I am delighted that Dr. Lisa Cook, an HBCU grad- uate and the first Black woman on the Fed Board, and Dr. Philip Jefferson, the 4th Black man, and someone who teaches in my dis- trict at Davidson, have joined you as well. We have discussed before how concerned I am about the housing market, and according to your February Monetary Policy Report, our housing shortage has been intensified by the growing cost of construction materials. Chair Powell, how do you think the Fed’s interest rate increase will impact the cost of construction? Mr. POWELL. I think it is leading to a slowdown in the housing market. You are seeing fewer buyers. You are seeing housing starts move back. The housing market is going to be cooling off. It has been very, very hot. Price increases have been extraordinarily high, and one of the channels through which monetary policy works is interest sensitive spending in particular. So, I do think it doesn’t directly affect construction costs, to your question, but many hous- ing builders, many home builders do work on borrowed money, and it will certainly affect their profits and their activities. Ms. ADAMS. Thank you. I have heard firsthand from construction firms from affordable housing providers in my city and my county, VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI 55 and many others, about the increase in construction costs, and how seriously hampered these groups are in building more affordable housing. So yes, I think we need to really pay a lot of attention to it, and it is really of concern. Thank you very much, and knowing that I am out of time, you probably are as well. Thank you, Madam Chairwoman. I yield back. Chairwoman WATERS. Thank you so very much. I would like to thank Chair Powell for his testimony today. The Chair notes that some Members may have additional ques- tions for this witness, which they may wish to submit in writing. Without objection, the hearing record will remain open for 5 legis- lative days for Members to submit written questions to this witness and to place his responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous mate- rials to the Chair for inclusion in the record. This hearing is adjourned. [Whereupon, at 1:01 p.m., the hearing was adjourned.] VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 K:\DOCS\HBA174.000 TERRI A P P E N D I X June 23, 2022 (57) VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00061 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 58 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00062 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 100.33384 ereh 1 oilof tesffo tresnI 59 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00063 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 200.33384 ereh 2 oilof tesffo tresnI 60 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00064 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 300.33384 ereh 3 oilof tesffo tresnI 61 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00065 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 400.33384 ereh 4 oilof tesffo tresnI 62 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00066 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 500.33384 ereh 5 oilof tesffo tresnI 63 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00067 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 600.33384 ereh 6 oilof tesffo tresnI 64 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00068 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 700.33384 ereh 7 oilof tesffo tresnI 65 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00069 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 800.33384 ereh 8 oilof tesffo tresnI 66 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00070 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 900.33384 ereh 9 oilof tesffo tresnI 67 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00071 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 010.33384 ereh 01 oilof tesffo tresnI 68 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00072 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 110.33384 ereh 11 oilof tesffo tresnI 69 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00073 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 210.33384 ereh 21 oilof tesffo tresnI 70 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00074 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 310.33384 ereh 31 oilof tesffo tresnI 71 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00075 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 410.33384 ereh 41 oilof tesffo tresnI 72 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00076 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 510.33384 ereh 51 oilof tesffo tresnI 73 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00077 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 610.33384 ereh 61 oilof tesffo tresnI 74 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00078 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 710.33384 ereh 71 oilof tesffo tresnI 75 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00079 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 810.33384 ereh 81 oilof tesffo tresnI 76 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00080 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 910.33384 ereh 91 oilof tesffo tresnI 77 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00081 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 020.33384 ereh 02 oilof tesffo tresnI 78 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00082 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 120.33384 ereh 12 oilof tesffo tresnI 79 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00083 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 220.33384 ereh 22 oilof tesffo tresnI 80 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00084 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 320.33384 ereh 32 oilof tesffo tresnI 81 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00085 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 420.33384 ereh 42 oilof tesffo tresnI 82 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00086 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 520.33384 ereh 52 oilof tesffo tresnI 83 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00087 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 620.33384 ereh 62 oilof tesffo tresnI 84 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00088 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 720.33384 ereh 72 oilof tesffo tresnI 85 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00089 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 820.33384 ereh 82 oilof tesffo tresnI 86 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00090 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 920.33384 ereh 92 oilof tesffo tresnI 87 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00091 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 030.33384 ereh 03 oilof tesffo tresnI 88 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00092 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 130.33384 ereh 13 oilof tesffo tresnI 89 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00093 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 230.33384 ereh 23 oilof tesffo tresnI 90 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00094 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 330.33384 ereh 33 oilof tesffo tresnI 91 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00095 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 430.33384 ereh 43 oilof tesffo tresnI 92 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00096 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 530.33384 ereh 53 oilof tesffo tresnI 93 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00097 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 630.33384 ereh 63 oilof tesffo tresnI 94 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00098 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 730.33384 ereh 73 oilof tesffo tresnI 95 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00099 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 830.33384 ereh 83 oilof tesffo tresnI 96 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00100 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 930.33384 ereh 93 oilof tesffo tresnI 97 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00101 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 040.33384 ereh 04 oilof tesffo tresnI 98 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00102 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 140.33384 ereh 14 oilof tesffo tresnI 99 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00103 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 240.33384 ereh 24 oilof tesffo tresnI 100 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00104 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 340.33384 ereh 34 oilof tesffo tresnI 101 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00105 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 440.33384 ereh 44 oilof tesffo tresnI 102 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00106 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 540.33384 ereh 54 oilof tesffo tresnI 103 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00107 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 640.33384 ereh 64 oilof tesffo tresnI 104 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00108 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 740.33384 ereh 74 oilof tesffo tresnI 105 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00109 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 840.33384 ereh 84 oilof tesffo tresnI 106 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00110 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 940.33384 ereh 94 oilof tesffo tresnI 107 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00111 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 050.33384 ereh 05 oilof tesffo tresnI 108 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00112 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 150.33384 ereh 15 oilof tesffo tresnI 109 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00113 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 250.33384 ereh 25 oilof tesffo tresnI 110 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00114 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 350.33384 ereh 35 oilof tesffo tresnI 111 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00115 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 450.33384 ereh 45 oilof tesffo tresnI 112 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00116 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 550.33384 ereh 55 oilof tesffo tresnI 113 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00117 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 650.33384 ereh 65 oilof tesffo tresnI 114 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00118 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 750.33384 ereh 75 oilof tesffo tresnI 115 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00119 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 850.33384 ereh 85 oilof tesffo tresnI 116 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00120 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 950.33384 ereh 95 oilof tesffo tresnI 117 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00121 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 060.33384 ereh 06 oilof tesffo tresnI 118 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00122 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 160.33384 ereh 16 oilof tesffo tresnI 119 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00123 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 260.33384 ereh 26 oilof tesffo tresnI 120 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00124 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 360.33384 ereh 36 oilof tesffo tresnI 121 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00125 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 460.33384 ereh 46 oilof tesffo tresnI 122 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00126 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 560.33384 ereh 56 oilof tesffo tresnI 123 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00127 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 660.33384 ereh 66 oilof tesffo tresnI 124 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00128 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 760.33384 ereh 76 oilof tesffo tresnI 125 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00129 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 860.33384 ereh 86 oilof tesffo tresnI 126 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00130 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 960.33384 ereh 96 oilof tesffo tresnI 127 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00131 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 070.33384 ereh 07 oilof tesffo tresnI 128 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00132 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 170.33384 ereh 17 oilof tesffo tresnI 129 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00133 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 270.33384 ereh 27 oilof tesffo tresnI 130 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00134 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 370.33384 ereh 37 oilof tesffo tresnI 131 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00135 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 470.33384 ereh 47 oilof tesffo tresnI 132 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00136 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 570.33384 ereh 57 oilof tesffo tresnI 133 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00137 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 670.33384 ereh 67 oilof tesffo tresnI 134 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00138 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 770.33384 ereh 77 oilof tesffo tresnI 135 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00139 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 870.33384 ereh 87 oilof tesffo tresnI 136 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00140 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 970.33384 ereh 97 oilof tesffo tresnI 137 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00141 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 080.33384 ereh 08 oilof tesffo tresnI 138 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00142 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 180.33384 ereh 18 oilof tesffo tresnI 139 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00143 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 280.33384 ereh 28 oilof tesffo tresnI 140 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00144 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 380.33384 ereh 38 oilof tesffo tresnI 141 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00145 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 480.33384 ereh 48 oilof tesffo tresnI 142 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00146 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 580.33384 ereh 58 oilof tesffo tresnI 143 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00147 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 680.33384 ereh 68 oilof tesffo tresnI 144 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00148 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 780.33384 ereh 78 oilof tesffo tresnI 145 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00149 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 880.33384 ereh 88 oilof tesffo tresnI 146 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00150 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 980.33384 ereh 98 oilof tesffo tresnI 147 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00151 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 090.33384 ereh 09 oilof tesffo tresnI 148 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00152 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 190.33384 ereh 19 oilof tesffo tresnI 149 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00153 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 290.33384 ereh 29 oilof tesffo tresnI 150 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00154 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 390.33384 ereh 39 oilof tesffo tresnI 151 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00155 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 490.33384 ereh 49 oilof tesffo tresnI 152 VerDate Nov 24 2008 15:20 Dec 29, 2022 Jkt 095071 PO 00000 Frm 00156 Fmt 6601 Sfmt 6601 K:\DOCS\HBA174.000 TERRI 590.33384 ereh 59 oilof tesffo tresnI

Jerome H. Powell (2022, June 22). Congressional Testimony. Testimony, Federal Reserve. https://whenthefedspeaks.com/doc/testimony_20220623_chair_monetary_policy_and_the_state_of_the

@misc{wtfs_testimony_20220623_chair_monetary_policy_and_the_state_of_the,
  author = {Jerome H. Powell},
  title = {Congressional Testimony},
  year = {2022},
  month = {Jun},
  howpublished = {Testimony, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/testimony_20220623_chair_monetary_policy_and_the_state_of_the},
  note = {Retrieved via When the Fed Speaks corpus}
}